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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
(MARK ONE)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED OCTOBER 31, 1997
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM _____ TO ______
COMMISSION FILE NO. 1-7775
FLUOR CORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE
(STATE OR OTHER JURISDICTION OF
INCORPORATION OR ORGANIZATION)
95-0740960
(I.R.S. EMPLOYER
IDENTIFICATION NUMBER)
3353 MICHELSON DRIVE, IRVINE, CALIFORNIA 92698
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (714) 975-2000
SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:
TITLE OF EACH CLASS
Common Stock, $0.625 par value
6.95% Notes due March 1, 2007
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NAME OF EACH EXCHANGE ON WHICH REGISTERED
New York Stock Exchange
Chicago Stock Exchange
Pacific Stock Exchange
SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:
None
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months, and (2) has been subject to such filing
requirements for the past 90 days. Yes [X] No [ ]
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [ ]
The aggregate market value of the registrant's voting stock held by
non-affiliates was $3,163,513,424 on January 13, 1998, based upon the average
between the highest and lowest sales prices of the registrant's Common Stock as
reported in the consolidated transactions reporting system.
Common Stock, $0.625 par value, outstanding as of January 13, 1998 --
83,115,266 shares.
DOCUMENTS INCORPORATED BY REFERENCE
Parts I, II and IV incorporate certain information by reference from the
registrant's Annual Report to shareholders for the fiscal year ended October 31,
1997.
Part III incorporates certain information by reference from the
registrant's definitive proxy statement for the annual meeting of shareholders
to be held on March 10, 1998, which proxy statement will be filed no later than
120 days after the close of the registrant's fiscal year ended October 31, 1997.
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PART I
ITEM 1. BUSINESS.
Fluor Corporation ("Fluor" or the "Company") was incorporated in Delaware
in 1978 as a successor in interest to a California corporation of the same name
that was originally incorporated in 1924. Its executive offices are located at
3353 Michelson Drive, Irvine, California 92698, telephone number (714) 975-2000.
Through Fluor Daniel, Inc. and other domestic and foreign subsidiaries,
the Company provides design, engineering, procurement, construction, maintenance
and other diversified services on a worldwide basis to an extensive range of
industrial, commercial, utility, natural resources, energy and governmental
clients.
The Company maintains investments in coal-related businesses through its
ownership of A. T. Massey Coal Company, Inc. ("Massey").
A summary of the Company's operations and activities by business segment
and geographic area is set forth below.
ENGINEERING AND CONSTRUCTION
The Fluor Daniel group of domestic and foreign companies ("Fluor Daniel")
provides a full range of design, engineering, procurement, construction,
maintenance and other diversified services to clients in a broad range of
industrial and geographic markets on a worldwide basis. The types of services
provided by Fluor Daniel, directly or through companies or partnerships jointly
owned or affiliations with other companies, include: feasibility studies,
conceptual design, detail engineering, procurement, project and construction
management, construction, maintenance, plant operations, technical support,
project finance, quality assurance/quality control, start-up assistance, site
evaluation, licensing, consulting, construction equipment sales and leasing,
temporary technical and non-technical staffing and environmental services.
Fluor Constructors International, Inc. ("Fluor Constructors") is organized
and operated separately from Fluor Daniel. Fluor Constructors provides
construction management, construction and maintenance services in the United
States and Canada. Fluor Constructors is the Company's union construction arm.
The engineering and construction business is conducted under various types
of contractual arrangements, including cost reimbursable (plus fixed or
percentage fee), all-inclusive rate, unit price, fixed or maximum price and
incentive fee contracts. Contracts are either competitively bid and awarded or
individually negotiated. While, in terms of dollar amount, the majority of
contracts are of the cost reimbursable type, there has been an increase in the
volume of cost-reimbursable contracts with incentive-fee arrangements and in the
volume of fixed or unit price contracts. In certain instances, the Company
guarantees facility completion by a scheduled acceptance date and/or achievement
of certain acceptance and performance testing levels. Failure to meet any such
schedule or performance requirements could result in additional costs and the
amount of such additional costs could exceed project profit margins.
The markets served by the business are highly competitive and for the most
part require substantial resources, particularly highly skilled and experienced
technical personnel. A large number of companies are competing in the markets
served by the business. Competition is primarily centered on performance and the
ability to provide the design, engineering, planning, management and project
execution skills required to complete complex projects in a safe, timely and
cost efficient manner. The engineering and construction business derives its
competitive strength from its diversity, reputation for quality,
cost-effectiveness, worldwide procurement capability, project management
expertise, geographic coverage, ability to meet client requirements by
performing construction on either a union or open shop basis, ability to execute
projects of varying sizes, strong safety record and lengthy experience with a
wide range of services and technologies.
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Design and engineering services provided by the engineering and
construction business involve the continual development of new and improved
versions of existing processes, materials or techniques, some of which are
patented. However, none of the existing or pending patents held or licensed by
the business are considered essential to operations. Generally, the development
and improvement of processes, materials and techniques are performed as part of
design and engineering services in connection with the projects undertaken for
various clients.
FLUOR DANIEL
Fluor Daniel's operations are organized into industry groups responsible
for identifying and capitalizing on opportunities in their market segments on a
global basis. Individual operating companies within the groups focus on specific
clients, industries and markets. The operating companies rely on a network of
globally located engineering offices to provide resources and expertise in
support of project execution worldwide. In addition to industry groups, Fluor
Daniel's operations also include the Global Sales and Strategies Group which is
responsible for strategic planning and provides sales and marketing support and
assistance to all of the other groups.
While the United States will remain an important market for Fluor Daniel's
services, increasingly the largest share of opportunities are located outside
the United States. Expansion of basic industries is increasing fundamental
energy requirements and infrastructure needs. Globalization of markets and
geopolitical change is also stimulating strategic investments in new production
facilities in these emerging markets.
The operations of Fluor Daniel are detailed below by industry group:
Process
The Process Group supports clients in the following basic industries:
petroleum, petrochemicals, production, pipelines, chemicals, plastics and
fibers.
During fiscal 1997, Process Group contract awards included: engineering,
procurement and project management for a pipeline, pump stations and marine
facilities in Russia and Kazakhstan; engineering, procurement and construction
management for a floating production storage offloading vessel in Scotland, a
pipeline and production facility in Ecuador, a nylon BCF expansion in Canada, an
ethylene facility in Argentina, an acrylate monomer plant and a maleic anhydrite
facility in Germany, paper and film finishing plants, a color line plant and
utilities, siting and infrastructure for plants in China, an alliance with Witco
for specialty chemical plants worldwide, a petrochemical complex in Saudi Arabia
and a refinery upgrade in Ohio; engineering and procurement for an expansion
project in Saudi Arabia, a pipeline between Argentina and Chile, a crude
stabilization project in Kazakhstan, a natural gas pipeline in New York, a joint
venture performing work on an ethylene facility in Canada, a chlor-alkali plant
in Texas, a polypropylene complex in Canada and an ethylene and polyethylene
project in Texas; engineering for a gas gathering and injection project in Abu
Dhabi, a derivatives plant in Malaysia, an FCC expansion project in Utah, an
ethylene and polyolefins complex in Abu Dhabi and a benzene and paraxylene
project in Thailand; engineering, procurement and construction for an upgrade of
a polypropylene plant in Texas, expansion of a DNT/SAC plant in Texas, a PBT
plant in South Carolina and a polypropylene project in Texas; capital
construction and maintenance services on an evergreen basis for various chemical
and fiber plants throughout the United States; engineering and construction
management for a CCR reformer project in Texas.
Ongoing projects in fiscal 1997 include: engineering, procurement and
construction management for a hydrotreater in Canada, a hydrodesulfurization
unit in Korea, a methanol plant in Norway, crude oil import/export pipeline,
tanks, oil pump stations and terminal in Lithuania, a polystyrene plant
expansion in Louisiana, a gas turbine generator in the Philippines, an ethylene
plant expansion in Saudi Arabia, a fluid catalytic cracker unit in Texas, a
L.S.D. hydrofiner in Canada, an export terminal expansion project in Scotland, a
pipeline and export terminal in Azerbaijan, a LNG upstream facility, offshore
gas platform, subsea and onshore pipelines in Trinidad, a refrigerated storage
tank in New Hampshire, a carbon graphite expansion in South Carolina and a resin
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coating plant in Great Britain; engineering, procurement and construction for a
polymer expansion facility in Virginia, a new film machine in an existing plant
in New York, debottlenecking of existing facilities and an expanded lube oil
plant in Indonesia, an upgrade of a residue hydrocracker in the Slovak Republic,
a polymer extrusion expansion in Louisiana, a PTA plant in the Netherlands and a
new PET facility in Mississippi; engineering and procurement for a CDU unit
revamp in Poland, a gas plant modification in England and a gas field
development including low temperature separation unit compression and control
facilities in the Netherlands; engineering and construction management for a
refinery modernization in Poland; construction management for a lube oil revamp
in Germany, an ethylene unit revamp in Louisiana, a paraxylene decoupling and
revamp in Alabama, a paraxylene unit in Korea and expansion and renovation of a
paint pigments plant in Delaware; engineering for numerous maintenance shutdowns
at various locations in the United States, a receiving terminal, pump stations,
meter stations, pipelines and export terminal in Azerbaijan, a debottlenecking
project in Indonesia, three geothermal power generation facilities in Indonesia,
a metaxylene unit in Texas, evergreen engineering support for Du Pont in Canada
and Europe, a polyethylene plant in Texas, a petroleum refinery expansion in Abu
Dhabi, a propylene recovery project in Pennsylvania, an ethoxics and ethanol
amines plant in Louisiana, an organic acids plant in Louisiana, a nylon facility
in China, a polylactide facility in Nebraska, a carbon black expansion in China,
a heavy oil upgrader in Venezuela, a nitrogen generation complex in Mexico and a
latex relocation in Thailand; construction and maintenance for evergreen small
capital construction services in Tennessee and South Carolina and for various
chemical and fiber plants throughout the United States; construction for an oxo
alcohol and a chemical plant both in Louisiana and a chemical line conversion
and waste water treatment plant both in South Carolina; project management for a
nylon tire cord plant in India and a 200,000 barrel a day production facility
with infrastructure, power generation and an 800 mile pipeline and single point
mooring loading terminal in Africa; a services alliance in Texas and for
numerous small capital projects at various locations in the United States.
Projects completed in fiscal 1997 include: engineering, procurement and
construction management for a 180 mile ethylene pipeline in Texas, an increase
in capacity of two hydrodesulfurization units and associated pipeline in
Venezuela, a gas oil hydrotreater in California and a gas injection and
underground storage facility in the Netherlands; engineering, procurement and
construction for a cat feed hydrotreater in Louisiana, a fluid catalytic cracker
unit in Korea, a vinyl acetate monomer plant in Singapore, a refinery upgrade in
the Netherlands, a hydrochlorofluorocarbon plant in Kentucky, a polypropylene
plant expansion in Pennsylvania and a hydrogen peroxide plant in Texas;
engineering, procurement, construction and program management for a
petrochemical complex in Kuwait; engineering and procurement for a 15 mile gas
pipeline with terminal in Mexico, an acrylate facility expansion in Texas, a
revamp of two paraxylene units in Alabama, a new propylene splitter unit in
Pennsylvania, a 354 kilometer pipeline with laterals from Mariquita to Cali in
Colombia, an oil production facility in Gabon and four offshore platforms in
Venezuela; procurement and construction management for general facilities and
utilities of a petrochemical complex in Kuwait; engineering for an expansion of
six existing crude oil pipeline pump stations in Colombia, an early production
system equipment and an oil field production facility in Colombia and a filter
products facility in Tennessee; project management for an offshore gas
compression platform and subsea pipeline in Vietnam; evergreen capital
construction and maintenance services for various chemical and fiber plants
throughout the United States.
Industrial
The Industrial Group provides a broad range of services by supporting
clients in the following industries: mining and metals, automotive and general
manufacturing, electronics, pharmbio, fine chemicals, food, beverage and
consumer products, commercial and institutional facilities, infrastructure,
telecommunications and forest products. The Industrial Group also supports
clients through ADP Marshall which provides professional services in
architecture, engineering and construction management in the electronics
industry and other industries, and through PACE, the operating company
dedicated to serving Fluor Daniel's alliance with Procter & Gamble.
During fiscal 1997, Industrial Group contract awards included:
construction management for an auto assembly plant in Brazil, a film
manufacturing facility, a passenger terminal, a prison, an office park, a wafer
processing facility, an office facility, an image masking operation facility,
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multiple clean room renovations, fit ups and expansions, a wafer fabrication
facility, the extension of an existing UTD facility, all in the United States,
an airport in South Korea, a concrete facility in Taiwan, a test/assembly plant
in Ireland and a tobacco facility in Malaysia; engineering, procurement and
construction of a nickel/cobalt mine and integrated processing facility in
Australia, a production facility and a snack food facility in the United States
and a copper mine in Peru; engineering, procurement and construction management
for a grassroots micromill, continuing work in an ongoing alliance with Aluminum
Company of America, an underground conveyor and crushing facility, a copper mine
expansion, a beta carotene production facility, a botulinum toxin facility, a
salt manufacturing facility, two snack food facilities and a beverage production
facility, all in the United States and a grassroots gold mine and a
conveyor/crusher refurbishment in Chile; engineering and construction management
for an export facility in China; engineering for billet conditioning, a pilot
plant production facility, an outsourcing contract for outside plant engineering
services and a bovine somatotrophin manufacturing facility in the United States
and for certain capital projects in Chile; construction of a snack food
facility in the United States.
Ongoing projects include: engineering, procurement and construction for a
copper and gold mine in Indonesia, a paper machine expansion in Georgia, an
ethanol facility in Canada, a vaccine manufacturing facility in Maryland, an
Emergency 911 response system for Chicago, Illinois and a food processing plant
expansion in Tennessee; engineering, procurement and construction management for
a grassroots copper and gold mine in Argentina, expansion of an iron ore
pelletizing processing facility in Brazil, a copper mine expansion in Indonesia,
a beltway around Denver, Colorado, a copper mine addition, a grassroots copper
mine and a potassium chloride plant expansion in Chile, a battery acid plant in
Saudi Arabia, a wafer facility in Washington, a bulk pharmaceuticals
manufacturing facility in Ireland, a vitamin manufacturing facility in New
Jersey, expansion and rebuild of various snack food plants in the United States,
a multi-product personal care facility in China and a cellular site buildout for
eight cities in the United States; engineering and procurement for a food
additive processing plant in Ohio; engineering and construction of pet foods
facilities in the United States; engineering and construction management for a
hotel renovation in Indonesia, a sports facility in South Carolina, a tobacco
facility in the Netherlands, a court/detention center in Texas and a propylated
starch facility in Indianapolis; construction management for a prison in
California, a tobacco processing plant in North Carolina, a multi-product
personal care facility in the Philippines, a nickel mine expansion in Indonesia,
a specialty steel mill in Pennsylvania, an HVAC upgrade to a distribution
facility in Mississippi, a convention center in Arkansas, a conferencing center
in Florida, a hotel renovation in California and major infrastructure for a
university in Saudi Arabia; engineering for an iron mine in Australia, a
grassroots micro mill in Nevada, a grassroots gold mine in Venezuela, a melt
shop facility in Indiana, an aluminum recycle mill in the United States, a
grassroots copper mine in Canada, a vitamin manufacturing facility in Texas, an
engineering alliance for a multi-product facility in California, a grassroots
solid dosage pharmaceutical plant in Oklahoma and a high speed rail project in
Florida; construction of a distribution warehouse in South Carolina and a
camcorder/laptop battery facility in Florida; project management for rail
stations for the Federal Transportation Administration in New York City and for
highway construction in Orange County, California; and project management for
rail transit recompetition in Los Angeles, California.
Projects completed in fiscal 1997 included: engineering, procurement and
construction for a wafer facility in the Philippines, a dyno/tank farm expansion
in South Carolina, a grassroots gold mine in Chile, a gold mine in Papua New
Guinea, a dry conversion process facility in North Carolina, rebuilding a carpet
manufacturing facility in Georgia, a contract manufacturing facility and
corporate headquarters in North Carolina and a packaging and distribution space
in a brown sugar facility in Florida; engineering, procurement and construction
management for a fine chemicals retrofit project in Tennessee, a gold heap leach
expansion in Peru, an automotive transaxle facility expansion in Ohio, an
automotive assembly plant in Argentina, apparel distribution centers at various
locations throughout the United States, a silicon wafer facility in Texas and
Phase 2 of a six city cellular buildout and an eight city cellular buildout in
the United States; engineering and construction of an engine plant expansion in
Ohio and a tile expansion facility in Mississippi; engineering and construction
management for a vaccine manufacturing plant in North Carolina; engineering and
procurement for a petro-sulfur forming plant in Canada; construction management
for a parking and athletic facility in Florida, the retail expansion for a
petroleum company in Colorado, a hotel in Indonesia, a correctional facility
expansion in California, the renovation of a turbine facility in South Carolina
and a train station terminal building in Kyoto, Japan; engineering for a general
services steel mill in the United States, a SX/EW copper mine in Chile, tool
hook-up in a wafer facility in Thailand, a potent compound bulk manufacturing
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facility in Georgia; construction for a personal care product plant in Puerto
Rico; maintenance services for an automotive facility in Tennessee; an
engineering study for a tableting facility in the former Soviet Union.
Power and Government
The Power and Government Group provides services to public electric
utilities, private power companies and the United States government. The
Duke/Fluor Daniel partnership provides services to the fossil fuel power
industry.
During fiscal 1997, Power and Government Group contract awards included:
engineering, procurement and construction for a heat recovery coke plant, a 95
megawatt power block plus flue gas de-sulfurization unit in Indiana, a 111
megawatt combined cycle cogeneration facility in Thailand and a 3X65 megawatt
coal plant in Indonesia; engineering, procurement, construction and program
management for a national laboratory in New Mexico; engineering and construction
management of a 115 kilovolt transmission facility in Washington; operations and
maintenance for a 2X50 megawatt cogeneration plant in China; assistance in
operations assessment for a coal plant in China; operations and/or maintenance
and support services for a 764 megawatt nuclear plant in Nebraska; engineering
for Federal Emergency Management Agency infrastructure support services
throughout the United States; renewals of contracts for maintenance services
for nuclear power plants in Arizona, Texas and South Carolina.
Ongoing projects include: engineering, procurement and construction for a
300 megawatt combined cycle plant in Saudi Arabia; engineering, procurement and
construction management for a cogeneration plant in Great Britain; procurement,
engineering, construction management and start-up for a 2X600 megawatt coal
fired power plant in Indonesia; operations and maintenance for a 175 megawatt
diesel system in Indonesia, a 130 megawatt cogeneration facility in Virginia and
a 151 megawatt facility in Delaware; engineering for a laboratory facility
upgrade in Illinois; maintenance for fossil and gas plants in South Carolina,
North Carolina, Texas, Georgia, Arkansas, Australia, South Africa, California,
Louisiana and Mississippi and renewal and maintenance for nuclear plants in
Maryland, South Carolina, Kansas, Missouri, Virginia, Texas, Maryland and
Arizona; management and integration contractor for a major United States
Department of Energy ("DOE") facility ("Hanford") in Washington; additional DOE
funding for engineering and design for nuclear materials storage plant under a
reconfiguration project in Nevada; engineering and construction management for
various radar and weather stations located throughout the United States for the
National Oceanic and Atmospheric Administration; engineering for the
reconfiguration of the DOE weapons program, the DOE National Engineering
Laboratories in Idaho and a waste handling facility for the DOE at Hanford;
environmental remediation management for the DOE former uranium processing plant
in Ohio (the "Fernald Project"); management and operation services for the
Naval Petroleum and Oil Shale Reserves program for the DOE in Colorado, Utah and
Wyoming.
Projects completed in fiscal 1997 included: engineering, procurement and
construction for a 160 megawatt cogeneration plant in Indiana, a 240 megawatt
combined cycle cogeneration plant in Louisiana, rebuilding of a fire damaged 650
megawatt combined cycle facility in Virginia and a 75 megawatt bottoming cycle
and 69 kilovolt transmission line in Illinois; engineering for a DOE waste
vitrification plant at Hanford; maintenance and support for a rebuild of a power
plant in Texas; maintenance for fossil and gas generation plants in Florida and
Tennessee.
Diversified Services
The Diversified Services Group was created in fiscal 1994 to expand
certain services provided by Fluor Daniel beyond the boundaries of the
traditional engineering and construction project cycle. These services have
typically been provided to projects in support of Fluor Daniel and have
developed into core skills. They are now offered on a standalone basis to new
clients and markets as well as traditional clients and markets external to Fluor
Daniel.
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The groups providing services include Facility & Plant Services, which
provides plant maintenance, management and efficiency services as well as plant
maintenance software; TRS Staffing Solutions, which provides technical,
professional and clerical temporary personnel as well as permanent placements;
American Equipment Company, which sells, leases and outsources equipment for
construction and industrial needs; Environmental Services, which provides
environmental engineering and construction services; and Fluor Daniel GTI, Inc.
(55% owned by Fluor Daniel) which provides environmental remediation services.
ACQUION, a provider of electronic catalog and ordering services, was sold.
During fiscal 1997, Diversified Services Group acquisitions included: the
acquisition by American Equipment Company of 100% of J. W. Burress, Inc., a
Virginia-based equipment rental company with branches in the Southeast; 100% of
SMA Equipment Company, a California-based heavy equipment sales and rental
company with operations throughout California; 100% of SMA/Stith Equipment, a
Georgia-based heavy equipment rental company with operations throughout Georgia;
65% of Maquinaria Panamericana, S.A. de C.V., an equipment rental company with
branches in Central Mexico; and the acquisition by TRS Staffing Solutions of
100% of First Legal, Ltd., a London-based permanent and temporary placement
services firm that specializes in legal staffing.
During fiscal 1997, Diversified Services Group dispositions included: the
sale of 100% of ACQUION, a provider of electronic catalog and ordering services.
During fiscal 1997, Diversified Services Group new awards included: an
equipment services agreement to provide all support equipment, operator training
and operators to mining sites in Chile, Indonesia and Peru and engineering for a
United States Air Force Center in Texas.
Ongoing projects include: an equipment outsourcing contract at a
petrochemical plant in Texas; maintenance for a tire manufacturing facility in
Tennessee, a petrochemical plant in Texas, a refinery in Mississippi, an
automobile manufacturing facility in Tennessee, computer manufacturing
facilities in Florida, Texas, North Carolina, Arizona, Colorado and California
and a vehicle manufacturing facility in Argentina; environmental investigation,
feasibility studies and remediation for the United States Army Environmental
Center, the United States Army Corps of Engineers and the United States
Environmental Protection Agency; engineering, procurement and construction
management for an environmental remediation program for a toxic waste site in
Indiana, the closure of a former ore processing site in Colorado and for a
former zinc smelter and refinery in the United States; engineering for an
alliance with Witco; environmental investigation and evaluation at U.S. military
facilities in Hawaii, Guam and Puerto Rico; site remediation at a plant in
Illinois.
Projects completed in fiscal 1997 included: computerized maintenance
system for a steel maker in Utah and glass products manufacturer at various
locations in the United States and a computerized maintenance system and
training services for a refinery in Asia.
FLUOR CONSTRUCTORS
Fluor Constructors is organized and operated separately from Fluor Daniel.
Fluor Constructors provides unionized construction management, construction and
maintenance services in the United States and Canada, both independently and as
a subcontractor to Fluor Daniel and global support to all Fluor Daniel industry
and regional groups.
During fiscal 1997, Fluor Constructors contract awards included:
construction and construction management services for a gas plant and pipeline
expansion in California, a refinery upgrade in Ohio and a cogeneration plant in
Indiana.
Ongoing projects include: maintenance and outage support at various plant
sites for a nuclear power plant in Missouri and for fossil fuel power plants in
Louisiana, Mississippi and Arkansas.
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Projects completed in fiscal 1997 included: construction and construction
management for steam turbine project in Indiana and a wafer fabrication facility
located in Camas, Washington; and maintenance and outage support for a nuclear
power plant in Maryland.
BACKLOG
The following table sets forth the consolidated backlog of Fluor's
engineering and construction segment at October 31, 1997 and 1996 by industry
group:
<TABLE>
<CAPTION>
1997 1996
------- -------
(IN MILLIONS OF DOLLARS)
<S> <C> <C>
Process ...................... $ 6,384 $ 4,903
Industrial ................... 5,178 6,496
Power and Government ......... 2,092 3,621
Diversified Services ......... 716 737
------- -------
$14,370 $15,757
======= =======
</TABLE>
The following table sets forth the consolidated backlog of Fluor's
engineering and construction segment at October 31, 1997 and 1996 by region:
<TABLE>
<CAPTION>
1997 1996
------- -------
(IN MILLIONS OF DOLLARS)
<S> <C> <C>
United States........................ $ 5,665 $ 7,326
Asia Pacific (including Australia)... 3,959 4,402
Europe, Africa and Middle East ...... 3,828 2,677
The Americas ........................ 918 1,352
------- -------
$14,370 $15,757
======= =======
</TABLE>
Estimated portion not to be performed during fiscal 1998: 30%
The dollar amount of the backlog is not necessarily indicative of the
future earnings of Fluor related to the performance of such work. Although
backlog represents only business which is considered to be firm, there can be no
assurance that cancellations or scope adjustments will not occur. Due to
additional factors outside of Fluor's control, such as changes in project
schedules, Fluor cannot predict with certainty the portion of its October 31,
1997 backlog estimated to be performed subsequent to fiscal 1998.
Approximately $1.5 billion of the Process Group's backlog at October 31,
1997, is attributable to the Yanpet project in Saudi Arabia. The decrease in the
Industrial Group's backlog at October 31, 1997 when compared with October 31,
1996 is due primarily to lower mining and metals awards activity in 1997.
Backlog in the Power and Government Group declined in fiscal 1997 compared with
fiscal 1996 primarily due to work performed at the DOE Fernald project and the
Paiton project. In addition, backlog in the Power and Government Group was
further affected by changes in new awards reporting for the Hanford project.
Previously, in fiscal 1996, Fluor recognized a $1.0 billion new award for the
Hanford project based upon the initial authorization for the project, which
represented the estimated total value of the work to be performed for the entire
project during fiscal 1997. In the fourth quarter of fiscal 1997, based upon
experience gained in 1997 regarding the DOE's fee determination procedures for
the Hanford project, Fluor recognized a new award of $220 million representing
only its estimated proportionate share of the work to be performed at the
Hanford site in 1998.
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COAL INVESTMENT
A. T. Massey Coal Company, Inc., which is headquartered in Richmond,
Virginia and its subsidiaries conduct Massey's coal-related businesses and are
collectively referred to herein as the "Massey Companies."
The Massey Companies produce, process and sell bituminous, low sulfur coal
of steam and metallurgical grades from 20 mining complexes (19 of which include
preparation plants) located in West Virginia, Kentucky, Virginia and Tennessee.
At October 31, 1997, one of the mining complexes was still in development and
not yet producing coal.
Operations at certain of the facilities are conducted in part through the
use of independent contract miners. The Massey Companies also purchase and
resell coal produced by unrelated companies. Steam coal is used primarily by
utilities as fuel for power plants. Metallurgical coal is used primarily to make
coke for use in the manufacture of steel.
For each of the three years in the period ended October 31, 1997, the
Massey Companies' production (expressed in thousands of short tons) of steam
coal and metallurgical coal, respectively, was 19,798 and 16,757 for fiscal
1997, 17,578 and 13,616 for fiscal 1996 and 15,790 and 11,634 for fiscal 1995.
Sales (expressed in thousands of short tons) of coal produced by the Massey
Companies were 35,643 for fiscal year 1997, 31,091 for fiscal year 1996 and
27,410 for fiscal 1995.
A large portion of the steam coal produced by the Massey Companies is sold
to domestic utilities under long-term contracts. Metallurgical coal is sold to
both foreign and domestic steel producers. Approximately 61% of the Massey
Companies' fiscal 1997 coal production was sold under long-term contracts, 60%
of which was steam coal and 40% of which was metallurgical coal. Approximately
14% of the coal tonnage sold by the Massey Companies in fiscal 1997 was sold
outside of North America.
Massey is among the five largest marketers of coal in the United States.
The coal market is a mature market with many strong competitors. Competition is
primarily dependent upon coal price, transportation cost, producer reliability
and characteristics of coal available for sale. The management of Massey
considers Massey to be generally well-positioned with respect to these factors
in comparison to its principal competitors.
Recently passed acid rain legislation is generally anticipated to benefit
prices for low sulfur coal. Massey intends to continue to evaluate and pursue,
in appropriate circumstances, the acquisition of additional low sulfur coal
reserves.
The Coal Industry Retiree Health Benefits Act of 1992 (the "Act") provides
that certain retired coal miners who were members of the United Mine Workers of
America, along with their spouses, are guaranteed health care benefits. The
Massey Companies' obligation under the Act is currently estimated to aggregate
approximately $42 million which will be recognized as expensed as payments are
made. The amount expensed during fiscal 1997 approximated $7.0 million.
The management of the Massey Companies estimates that, as of October 31,
1997, the Massey Companies had total recoverable reserves (expressed in
thousands of short tons) of 1,763,475; 740,775 of which are assigned recoverable
reserves and 1,022,700 of which are unassigned recoverable reserves; and
1,286,946 of which are proven recoverable reserves and 476,529 of which are
probable recoverable reserves.
The management of the Massey Companies estimates that approximately 36% of
the total reserves listed above consist of reserves that would be considered
primarily metallurgical grade coal. They also estimate that approximately 67% of
all reserves contain less than 1% sulfur. A portion of the steam coal reserves
could be beneficiated to metallurgical grade by coal preparation plants and
substantially all of the metallurgical coal reserves could be sold as high
quality steam coal, if market conditions warrant.
10
<PAGE> 11
"Reserves" means that part of a coal deposit which could be economically
and legally extracted or produced at the time of the reserve determination.
"Recoverable reserves" means coal which is recoverable by the use of existing
equipment and methods under federal and state laws now in effect. "Assigned
recoverable reserves" means reserves which can reasonably be expected to be
mined from existing or planned mines and processed in existing or planned
plants. "Unassigned recoverable reserves" means reserves for which there are no
specific plans for mining and which will require for their recovery substantial
capital expenditures for mining and processing facilities. "Proven recoverable
reserves" refers to deposits of coal which are substantiated by adequate
information, including that derived from exploration, current and previous
mining operations, outcrop data and knowledge of mining conditions. "Probable
recoverable reserves" refers to deposits of coal which are based on information
of a more preliminary or limited extent or character, but which are considered
likely.
OTHER MATTERS
ENVIRONMENTAL, SAFETY AND HEALTH MATTERS
The Massey Companies are affected by and comply with federal, state and
local laws and regulations relating to environmental protection and plant and
mine safety and health, including but not limited to the federal Surface Mining
Control and Reclamation Act of 1977; Occupational Safety and Health Act; Mine
Safety and Health Act of 1977; Water Pollution Control Act, as amended by the
Clean Water Act of 1977; Black Lung Benefits Revenue Act of 1977; and Black Lung
Benefits Reform Act of 1977. It is impossible to predict the full impact of
future legislative or regulatory developments on such operations, because the
standards to be met, as well as the technology and length of time available to
meet those standards, continue to develop and change.
In fiscal 1997, Massey expended approximately $7.1 million to comply with
environmental, health and safety laws and regulations, none of which were
capitalized. Massey anticipates making $10.3 million and $9.8 million in such
non-capital expenditures in fiscal 1998 and 1999, respectively. Of these
expenditures, $5.1 million, $6.5 million and $5.9 million for fiscal 1997, 1998
and 1999, respectively, were or are anticipated to be for surface reclamation.
Existing financial reserves are believed to be adequate to cover actual and
anticipated reclamation expenditures.
Other
In 1986, the California North Coast Regional Water Quality Control Board
for the State of California requested that the Company perform a site
investigation of a property in Northern California designated as a hazardous
waste site under the California Hazardous Waste Control Act. The Company
formerly owned the property. The California Environmental Protection Agency has
assumed lead agency status for any required remedial action at the site. The
Company signed a Consent Order to perform a remedial investigation/feasibility
study that will determine the extent of contamination for purposes of
determining the remedial action required to remedy and/or remove the
contamination.
In 1994, Fluor completed the sale of its lead business. The sale by Fluor
of its lead business included St. Joe Minerals Corporation ("St. Joe") and its
environmental liabilities for several different lead mining, smelting and other
lead related environmental sites. As a condition of the St. Joe sale, however,
Fluor retained responsibility for certain non-lead related environmental
liabilities arising out of St. Joe's former zinc mining and smelting division,
but only to the extent that such liabilities are not covered by St. Joe's
comprehensive general liability insurance. These liabilities arise out of three
zinc facilities located in Bartlesville, Oklahoma, Monaca, Pennsylvania and
Balmat, New York.
The Company believes, based upon present information available to it, that
its accruals with respect to future environmental costs are adequate and such
future costs will not have a material effect on the Company's consolidated
financial position, results of operations or liquidity. However, the imposition
11
<PAGE> 12
of more stringent requirements under environmental laws or regulations, new
developments or changes regarding site cleanup costs or the allocation of such
costs among potentially responsible parties, or a determination that the Company
is potentially responsible for the release of hazardous substances at sites
other than those currently identified, could result in additional expenditures
or the provision of additional accruals in expectation of such expenditures.
NUMBER OF EMPLOYEES
The following table sets forth the number of salaried and craft/hourly
employees of Fluor and its subsidiaries engaged in Fluor's business segments as
of October 31, 1997:
<TABLE>
<CAPTION>
SALARIED CRAFT/HOURLY TOTAL
-------- ------------ -----
<S> <C> <C> <C>
Engineering and Construction 30,347 27,364 57,711
Coal ....................... 1,045 1,923 2,968
------ ------ ------
31,392 29,287 60,679
====== ====== ======
</TABLE>
OPERATIONS BY BUSINESS SEGMENT AND GEOGRAPHIC AREA
The financial information for business segments and geographic areas is
included in the Operations by Business Segment and Geographic Area section of
the Notes to Consolidated Financial Statements in Fluor's 1997 Annual Report to
shareholders, which section is incorporated herein by reference.
ITEM 2. PROPERTIES.
Major Facilities
Operations of Fluor and its subsidiaries are conducted in both owned and
leased properties totaling approximately 7.1 million square feet. In addition,
certain owned or leased properties of Fluor and its subsidiaries are leased or
subleased to third party tenants. The following table describes the location and
general character of the major existing facilities, exclusive of mines, coal
preparation plants and their adjoining offices:
<TABLE>
<CAPTION>
LOCATION INTEREST PURPOSE
-------- -------- -------
UNITED STATES AND CANADA:
<S> <C> <C>
Irvine, California Leased Fluor Corporate Headquarters and Fluor Daniel Operations
Calgary, Canada Leased Fluor Daniel Canada Operations
Charlotte, North Carolina Leased Duke/Fluor Daniel Operations
Chicago, Illinois Leased Fluor Daniel Operations
Cincinnati, Ohio Leased Fluor Daniel Operations and Procter & Gamble Alliance (PACE)
Greenville, South Carolina Owned and Leased Fluor Daniel and American Equipment Operations
Houston (Sugar Land office), Texas Owned Fluor Daniel Operations
Pasadena, Texas Owned American Equipment Offices and Yard
Philadelphia, Pennsylvania Leased Fluor Daniel Operations
(Marlton, New Jersey Office)
Richland, Washington Leased Fluor Daniel Hanford Operations
Riverside, California Owned American Equipment Offices and Yard
Riverside, Illinois Owned American Equipment Offices and Yard
Tucson, Arizona Leased ADP Marshall Operations
Tulsa, Oklahoma Leased Williams Brothers Operations
Vancouver, Canada Leased Fluor Daniel Wright Operations
Washington, D.C. Leased Fluor Daniel Operations
</TABLE>
12
<PAGE> 13
<TABLE>
<CAPTION>
LOCATION INTEREST PURPOSE
-------- -------- -------
THE AMERICAS:
<S> <C> <C>
Caracas, Venezuela Leased Tecnofluor Operations
Mexico City, Mexico Leased ICA Fluor Daniel Operations
Monterey, Mexico Owned American Equipment Offices and Yard
Santiago, Chile Owned and Leased Fluor Daniel and American Equipment Operations
EUROPE, AFRICA AND MIDDLE EAST:
Al Khobar, Saudi Arabia (Dhahran area) Owned Fluor Daniel Operations
Asturias, Spain Leased Fluor Daniel Operations
Camberley, England Leased Fluor Daniel Operations
Haarlem, Netherlands Owned and Leased Fluor Daniel Operations
Sandton, South Africa Leased Fluor Daniel Operations
ASIA PACIFIC:
Manila, Philippines Leased Fluor Daniel Operations
Melbourne, Australia Leased Fluor Daniel Operations
COAL OFFICES:
Richmond, Virginia Owned A. T. Massey Operations
Charleston, West Virginia Leased A. T. Massey Operations
</TABLE>
Coal Properties
See Item 1, Business, of this report for additional information regarding
the coal operations and properties of Fluor.
ITEM 3. LEGAL PROCEEDINGS.
Fluor and its subsidiaries, incident to their business activities, are
parties to a number of legal proceedings in various stages of development,
including but not limited to those described below. The majority of these
proceedings, other than environmental proceedings, involve matters as to which
liability, if any, of Fluor or its subsidiaries would be adequately covered by
insurance. With respect to litigation outside the scope of applicable insurance
coverage and to the extent insured claims may exceed liability limits, it is the
opinion of the management of Fluor, based on reports of counsel, that these
matters individually and in the aggregate will not have a material adverse
effect upon the consolidated financial position or results of operations of
Fluor.
13
<PAGE> 14
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
Not applicable.
EXECUTIVE OFFICERS OF THE REGISTRANT(1)
OFFICE OF THE CHAIRMAN(1)
DON L. BLANKENSHIP, age 47
Director since September 1996; Appointed to Office of the Chairman,
December 1997; Chairman of the Board and Chief Executive Officer of A.T. Massey
Coal Company, Inc.(3) since January 1992; formerly President and Chief Operating
Officer of that subsidiary from 1990; formerly President of Massey Coal
Services, Inc.(4) from 1989; joined Rawl Sales & Processing Co.(5) in 1982.
JAMES C. STEIN, age 54
Director since December 1997; Appointed to Office of the Chairman,
December 1997; President and Chief Operating Officer, Fluor Daniel, Inc.(2)
since March 1997; formerly Group President, Diversified Services, of Fluor
Daniel, Inc. since May 1994; formerly President, Business Units, of that company
from 1993; formerly President, Industrial Sector, of that company from 1986;
joined the Company in 1964.
JAMES O. ROLLANS, age 55
Director since December 1997; Appointed Office of the Chairman, December
1997; Chief Administrative Officer since May 1994; Senior Vice President since
1992; formerly Chief Financial Officer from 1992; formerly Vice President,
Corporate Communications from 1982; joined the Company in 1982.
OTHER EXECUTIVE OFFICERS OF REGISTRANT
DENNIS W. BENNER, age 56
Vice President and Chief Information Officer since November 1994; formerly
Vice President and General Manager, Information and Vice President and General
Manager, Target Marketing Services, for TRW from 1992 and 1986, respectively.
CHARLES J. BRADLEY, JR., age 62
Vice President, Human Resources and Administration since 1986; joined the
Company in 1958.
LILA J. CHURNEY, age 45
Vice President, Investor Relations since December 1994; joined the
company in 1980.
J. MICHAL CONAWAY, age 49
Senior Vice President and Chief Financial Officer since December 1996;
formerly Vice President and Chief Financial Officer since May 1994; formerly
Vice President, Finance, from 1993; formerly Vice President and Chief Financial
Officer of National Gypsum Company and its parent, Aancor Holdings, Inc., from
1988.
LAWRENCE N. FISHER, age 53
Senior Vice President, Law and Secretary, since March 1996; formerly Vice
President, Corporate Law and Assistant Secretary from 1984; joined the Company
in 1974.
14
<PAGE> 15
CHARLES R. OLIVER, JR., age 54
Group President, Regions, Sales and Strategic Planning of Fluor Daniel,
Inc.(2) since December 1997; formerly Group President, Europe, Africa, Middle
East and India of that company since March 1997; formerly Group President,
Sales, Marketing and Strategic Planning of Fluor Daniel, Inc.(2) since May 1994;
formerly President, Business Units, of that company from 1993; formerly
President, Hydrocarbon Sector, from 1986; joined the Company in 1970.
- ----------
(1) Except where otherwise indicated, all references are to positions held
with Fluor.
(2) Fluor Daniel, Inc., which provides design, engineering, procurement,
construction management, maintenance and other diversified services to a
wide range of industrial, commercial, utility, natural resources, energy
and governmental clients, is an indirectly wholly-owned subsidiary of
Fluor.
(3) A. T. Massey Coal Company, Inc. ("A. T. Massey"), is an indirectly
wholly-owned subsidiary of Fluor which, along with A. T. Massey's
subsidiaries, conducts A. T. Massey's coal-related businesses.
(4) Massey Coal Services, Inc. is a wholly-owned subsidiary of A. T. Massey.
(5) Rawl Sales & Processing Co. is a wholly-owned subsidiary of A. T. Massey.
15
<PAGE> 16
PART II
Information for Items 5, 6 and 7 is contained in Fluor's 1997 Annual
Report to shareholders, which information is incorporated herein by reference
(and except for these sections and sections incorporated herein by reference in
Items 1 and 8 of this report, Fluor's 1997 Annual Report to shareholders is not
to be deemed filed as part of this report):
<TABLE>
<CAPTION>
ITEM NO. TITLE ANNUAL REPORT TO SHAREHOLDERS SECTION
- -------- ----- -------------------------------------
<S> <C> <C>
ITEM 5. Market for Registrant's Common Equity and Related
Stockholder Matters....................................................... Shareholders' Reference
ITEM 6. Selected Financial Data................................................... Selected Financial Data
ITEM 7. Management's Discussion and Analysis of Financial Condition
and Results of Operations................................................. Management's Discussion and Analysis
ITEM 7A. Quantitative and Qualitative Discussions about Market Risk................ Management's Discussion and Analysis
</TABLE>
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Information for Item 8 is included in Fluor's consolidated financial
statements as of October 31, 1997 and 1996 and for each of the three years in
the period ended October 31, 1997 and Fluor's unaudited quarterly financial data
for the two year period ended October 31, 1997, in the Consolidated Financial
Statements (including the Consolidated Balance Sheet, Consolidated Statement of
Earnings, Consolidated Statement of Cash Flows, Consolidated Statement of
Shareholders' Equity and Notes to Consolidated Financial Statements) and
unaudited Quarterly Financial Data sections of Fluor's 1997 Annual Report to
shareholders, which are incorporated herein by reference. The report of
independent auditors on Fluor's consolidated financial statements is in the
Reports of Management and Independent Auditors section of Fluor's 1997 Annual
Report to shareholders and is also incorporated herein by reference.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.
Not Applicable.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.
Information concerning Fluor's executive officers is included under the
caption "Executive Officers of the Registrant" in Part I, following Item 4.
Other information required by this item is included in the Biographical section
of the Election of Directors portion of the definitive proxy statement pursuant
to Regulation 14A, involving the election of directors, which is incorporated
herein by reference and will be filed with the Securities and Exchange
Commission (the "Commission") not later than 120 days after the close of Fluor's
fiscal year ended October 31, 1997.
ITEM 11. EXECUTIVE COMPENSATION.
Fluor maintains certain employee benefit plans and programs in which its
executive officers and directors are participants. Copies of these plans and
programs are set forth or incorporated by reference as Exhibits 10.1 through
16
<PAGE> 17
10.21 inclusive to this report. Certain of these plans and programs provide for
payment of benefits or for acceleration of vesting of benefits upon the
occurrence of a change of control of Fluor as that term is defined in such plans
and programs. The amounts payable thereunder would represent an increased cost
to be paid by Fluor (and indirectly by its shareholders) in the event of a
change in control of Fluor. This increased cost would be a factor to be taken
into account by a prospective purchaser of the Company in determining whether
and at what price, it would seek control of the Company and whether it would
seek the removal of then existing management.
If a change of control were to have occurred on October 31, 1997, the
additional amounts payable by Fluor, either in cash or in stock, if each of the
five most highly compensated executive officers and all executive officers as a
group were thereupon involuntarily terminated without cause would be as follows:
<TABLE>
<CAPTION>
RESTRICTED SUPPLEMENTAL
STOCK BENEFIT
INDIVIDUAL OR GROUP PLANS(1) PLAN(2)
------------------- ---------- -----------
<S> <C> <C>
Leslie G. McCraw............................................ $3,027,384 $ 1,391,800
Don L. Blankenship.......................................... 963,137 284,364
James C. Stein.............................................. 780,121 113,746
James O. Rollans............................................ 1,090,417 170,618
J. Michal Conaway........................................... 415,559 113,746
All Executive Officers (10) including the above............. $8,213,460 $2,518,453
</TABLE>
- ------------------
(1) Value at October 31, 1997 of previously awarded restricted stock which
would vest upon change of control.
(2) Lump sum entitlement of previously awarded benefits which would vest upon
change of control.
Further disclosure required by this item is included in the Organization
and Compensation Committee Report on Executive Compensation and Executive
Compensation and Other Information sections of the definitive proxy statement
pursuant to Regulation 14A, involving the election of directors, which is
incorporated herein by reference and will be filed not later than 120 days after
the close of Fluor's fiscal year ended October 31, 1997.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
Information required by this item is included in the Stock Ownership
section of the Election of Directors portion of the definitive proxy statement
pursuant to Regulation 14A, involving the election of directors, which is
incorporated herein by reference and will be filed not later than 120 days after
the close of Fluor's fiscal year ended October 31, 1997.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
Information required by this item is included in the Other Matters section
of the Election of Directors portion of the definitive proxy statement pursuant
to Regulation 14A, involving the election of directors, which is incorporated
herein by reference and will be filed not later than 120 days after the close of
Fluor's fiscal year ended October 31, 1997.
17
<PAGE> 18
PART IV
Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K.
(a) 1. Financial Statements: The financial statements required to be
filed hereunder are listed on page 23 hereof. See Part II, Item 8 of
this report for information regarding the incorporation by reference
herein of such financial statements.
2. Financial Statement Schedules: All schedules have been omitted since
the required information is not present or not present in amounts
sufficient to require submission of the schedule, or because the
information required is included in the consolidated financial
statements and notes thereto.
3. Exhibits:
3.1 Restated Certificate of Incorporation of Fluor Corporation [filed as
Exhibit 3.1 to Fluor's annual report on Form 10-K for the fiscal year
ended October 31, 1987 and incorporated herein by reference]
3.2 Restated Bylaws (as amended effective January 27, 1998) of Fluor
Corporation
4.1 Indenture dated July 1, 1986 between Fluor Corporation and Irving
Trust Company, trustee [filed as Exhibit 4 to Registration No.
33-6960 for the issuance of up to $250 million of debt securities and
incorporated herein by reference]
4.2 Fluor Corporation Dividend Reinvestment Plan (as amended and restated
June 30, 1995) [filed as Exhibit 4.2 to Fluor's annual report on Form
10-K for the fiscal year ended October 31, 1995 and incorporated
herein by reference]
4.3 Indenture dated as of February 18, 1997 between Fluor Corporation and
Banker's Trust Company, trustee [filed as Exhibit 4 to Form S-3,
Registration No. 333-18315 for the issuance of up to $350 million of
debt securities and incorporated herein by this reference].
EXECUTIVE COMPENSATION PLANS/PROGRAMS
10.1 Fluor Corporation and Subsidiaries Executive Incentive Compensation
Plan (as amended and restated through September 15, 1988) [filed as
Exhibit 10.2 to Fluor's quarterly report on Form 10-Q for the
quarterly period ended July 31, 1996 and incorporated herein by
reference]
10.2 Fluor Executive Deferred Compensation Program (as amended and
restated effective May 1, 1995) [filed as Exhibit 10.2 to Fluor's
annual report on Form 10-K for the fiscal year ended October 31,1995
and incorporated herein by this reference]
10.3 Fluor Corporation Deferred Directors' Fees Program (as amended
through November 15, 1983) [filed as Exhibit 10.4 to Fluor's
quarterly report on Form 10-Q for the quarterly period ended April
30,1995 and incorporated herein by reference]
10.4 1977 Fluor Executive Stock Plan (as amended by Amendment No. 4
effective December 9, 1986) [filed as Exhibit 10.6 to Fluor's annual
report on Form 10-K for the fiscal year ended October 31,1986 and
incorporated herein by reference]
10.5 1981 Fluor Executive Stock Plan (as amended by Amendment No. 3
effective December 9, 1986) [filed as Exhibit 10.9 to Fluor's annual
report on Form 10-K for the fiscal year ended October 31, 1986 and
incorporated herein by reference]
18
<PAGE> 19
10.6 1982 Fluor Executive Stock Option Plan (as amended by Amendment No. 2
effective December 9, 1986) [filed as Exhibit 10.10 to Fluor's annual
report on Form 10-K for the fiscal year ended October 31, 1986 and
incorporated herein by reference]
10.7 Fluor Executives' Health Plan Summary [filed as Exhibit 10.11 to
Fluor's annual report on Form 10-K for the fiscal year ended October
31, 1985 and incorporated herein by reference]
10.8 Directors' Life Insurance Summary [filed as Exhibit 10(i) to Fluor's
annual report on Form 10-K for the fiscal year ended October 31, 1980
and incorporated herein by reference]
10.9 Executive Tax Services Plan (as amended and effective as of November
1, 1993) [filed as Exhibit 10.10 to Fluor's annual report on Form
10-K for the fiscal year ended October 31, 1993 and incorporated
herein by reference]
10.10 Executive Personal Financial Counseling Plan (as amended and
effective as of November 1, 1993) [filed as Exhibit 10.11 to Fluor's
annual report on Form 10-K for the fiscal year ended October 31, 1993
and incorporated herein by reference]
10.11 Company Automobile Policy Summary [filed as Exhibit 10.15 to Fluor's
annual report on Form 10-K for the fiscal year ended October 31, 1989
and incorporated herein by reference]
10.12 Fluor Executives' Supplemental Benefit Plan (as amended by First
Amendment effective November 15, 1983) [filed as Exhibit 10.16 to
Fluor's annual report on Form 10-K for the fiscal year ended October
31, 1983 and incorporated herein by reference]
10.13 1988 Fluor Executive Stock Plan (as amended and restated effective
December 6, 1994) [filed as Exhibit 10.13 to Fluor's annual report on
Form 10-K for the fiscal year ended October 31, 1995 and incorporated
herein by reference]
10.14 Fluor Corporation Change of Control Compensation Plan (as amended and
restated by Second Amendment effective October 1, 1989) [filed as
Exhibit 10.19 to Fluor's annual report on Form 10-K for the fiscal
year ended October 31, 1989 and incorporated herein by reference]
10.15 Fluor Special Executive Incentive Plan (as amended effective December
6, 1994) [filed as Exhibit 10.15 to Fluor's annual report on Form
10-K for the fiscal year ended October 31, 1995 and incorporated
herein by reference]
10.16 Retirement Plan for Outside Directors (effective as of May 1, 1992)
[filed as Exhibit 10.18 to Fluor's annual report on Form 10-K for the
fiscal year ended October 31, 1992 and incorporated herein by
reference]
10.17 Executive Severance Plan (effective as of April 14, 1997)
10.18 Directors' Achievement Award Program (effective as of December 6,
1994) [filed as Exhibit 10.18 to Fluor's annual report on Form 10-K
for the fiscal year ended October 31, 1995 and incorporated herein by
reference]
10.19 Fluor Corporation Stock Plan for Non-Employee Directors (adopted
effective March 14, 1995) [filed as Exhibit 10.21 to Fluor's
quarterly report on Form 10-Q for the quarterly period ended April
30, 1995 and incorporated herein by reference]
10.20 1996 Fluor Executive Stock Plan (effective March 12, 1996 as amended
December 10, 1996) [filed as Exhibit 10.20 to Fluor's annual report
on Form 10-K for the fiscal year ended October 31, 1996 and
incorporated herein by this reference]
19
<PAGE> 20
10.21 Fluor Corporation Restricted Stock Plan for Non-Employee Directors
[filed as Exhibit 10.1 to Fluor's quarterly report as Form 10-Q for
the quarterly period ended April 30, 1997 and incorporated herein by
this reference]
OTHER CONTRACTS
10.22 Concourse Lease dated as of July 26, 1985 between Fluor Corporation
and Fluor Engineers, Inc. (an entity now having the corporate name of
Fluor Daniel, Inc.) with respect to a portion of the International
Headquarters facility located in Irvine, California, formerly owned
by Fluor (the "Irvine facility"); Schedule of substantially identical
Building Pod Lease and Corporate Tower Lease; and Assignment of
Master Leases dated July 26, 1985, assigning Fluor's lessor interest
to Crow Winthrop Operating Partnership ("CWOP") [filed as Exhibit
10.21 to Fluor's annual report on Form 10-K for the fiscal year ended
October 31, 1985 and incorporated herein by reference]
10.23 Amendment to Master Leases by and between CWOP, Fluor Daniel, Inc.
and Fluor Corporation dated as of November 1, 1989 with respect to
the Irvine facility [filed as Exhibit 10.19 to Fluor's annual report
on Form 10-K for the fiscal year ended October 31, 1991 and
incorporated herein by reference]
13 Certain portions of 1997 Annual Report to shareholders (with the
exception of the information incorporated by reference into Items 1,
5, 6, 7 and 8 of this report, Fluor's 1997 Annual Report to
shareholders is not deemed to be filed as part of this report)
21 Fluor Corporation Subsidiaries
23 Consent of Independent Auditors -- Ernst & Young LLP
24.1 Manually signed Powers of Attorney executed by certain Fluor
directors
27 Financial Data Schedule
99.1 Current Report on Form 8-K filed May 6, 1997
(b) Reports on Form 8-K:
None were filed during the last quarter of the period covered by
this report.
20
<PAGE> 21
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
FLUOR CORPORATION
January 28, 1998
By: /s/ J. M. CONAWAY
------------------------------------
J. M. Conaway, Senior Vice President
and Chief Financial Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
PRINCIPAL EXECUTIVE OFFICER AND DIRECTOR:
/s/ J. O. ROLLANS Director, Chief January 28, 1998
- --------------------------------------------- Administrative Officer
J. O. Rollans
PRINCIPAL FINANCIAL AND ACCOUNTING OFFICER:
/s/ J. M. CONAWAY Senior Vice President and Chief January 28, 1998
- --------------------------------------------- Financial Officer
J. M. Conaway
OTHER DIRECTORS:
* Director January 28, 1998
- ---------------------------------------------
D. A. Blankenship
* Director January 28, 1998
- ---------------------------------------------
C. A. Campbell, Jr.
* Director January 28, 1998
- ---------------------------------------------
P. J. Fluor
* Director January 28, 1998
- ---------------------------------------------
D. P. Gardner
* Director January 28, 1998
- ---------------------------------------------
T. L. Gossage
* Director January 28, 1998
- ---------------------------------------------
B. R. Inman
* Director January 28, 1998
- ---------------------------------------------
V. S. Martinez
</TABLE>
21
<PAGE> 22
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
* Director January 28, 1998
- ---------------------------------------------
L. G. McCraw
* Director January 28, 1998
- ---------------------------------------------
D. R. O'Hare
* Director January 28, 1998
- ---------------------------------------------
Lord Renwick, K.C.M.G.
* Director January 28, 1998
- ---------------------------------------------
M. R. Seger
* Director January 28, 1998
- ---------------------------------------------
J.C. Stein
By: /s/ R. M. BUKATY January 28, 1998
------------------------------------------
R. M. Bukaty
Attorney-in-fact
</TABLE>
Manually signed Powers of Attorney authorizing L. N. Fisher, R. M. Bukaty
and R. R. Dryden and each of them, to sign the annual report on Form 10-K for
the fiscal year ended October 31, 1997 and any amendments thereto as
attorneys-in-fact for certain directors of the registrant are included herein
as Exhibits 24.1.
22
<PAGE> 23
FLUOR CORPORATION
INDEX TO FINANCIAL STATEMENTS
AND FINANCIAL STATEMENT SCHEDULES
ITEM 14(a)
1. FINANCIAL STATEMENTS
The following financial statements are contained in Fluor's 1997 Annual
Report to shareholders:
Consolidated Balance Sheet at October 31, 1997 and 1996
Consolidated Statement of Earnings for the years ended October 31,
1997, 1996 and 1995
Consolidated Statement of Cash Flows for the years ended October 31,
1997, 1996 and 1995
Consolidated Statement of Shareholders' Equity for the years ended
October 31, 1997, 1996 and 1995
Notes to Consolidated Financial Statements
2. FINANCIAL STATEMENT SCHEDULES
All schedules have been omitted since the required information is not
present or not present in amounts sufficient to require submission of the
schedule, or because the information required is included in the consolidated
financial statements and notes thereto.
23
<PAGE> 24
EXHIBIT INDEX
Exhibit
Number Description
- ------- -----------
(a) 1. Financial Statements: The financial statements required to be
filed hereunder are listed on page 23 hereof. See Part II, Item 8 of
this report for information regarding the incorporation by reference
herein of such financial statements.
2. Financial Statement Schedules: All schedules have been omitted since
the required information is not present or not present in amounts
sufficient to require submission of the schedule, or because the
information required is included in the consolidated financial
statements and notes thereto.
3. Exhibits:
3.1 Restated Certificate of Incorporation of Fluor Corporation [filed as
Exhibit 3.1 to Fluor's annual report on Form 10-K for the fiscal year
ended October 31, 1987 and incorporated herein by reference]
3.2 Restated Bylaws (as amended effective January 27, 1998) of Fluor
Corporation
4.1 Indenture dated July 1, 1986 between Fluor Corporation and Irving
Trust Company, trustee [filed as Exhibit 4 to Registration No.
33-6960 for the issuance of up to $250 million of debt securities and
incorporated herein by reference]
4.2 Fluor Corporation Dividend Reinvestment Plan (as amended and restated
June 30, 1995) [filed as Exhibit 4.2 to Fluor's annual report on Form
10-K for the fiscal year ended October 31, 1995 and incorporated
herein by reference]
4.3 Indenture dated as of February 18, 1997 between Fluor Corporation and
Banker's Trust Company, trustee [filed as Exhibit 4 to Form S-3,
Registration No. 333-18315 for the issuance of up to $350 million of
debt securities and incorporated herein by this reference].
EXECUTIVE COMPENSATION PLANS/PROGRAMS
10.1 Fluor Corporation and Subsidiaries Executive Incentive Compensation
Plan (as amended and restated through September 15, 1988) [filed as
Exhibit 10.2 to Fluor's quarterly report on Form 10-Q for the
quarterly period ended July 31, 1996 and incorporated herein by
reference]
10.2 Fluor Executive Deferred Compensation Program (as amended and
restated effective May 1, 1995) [filed as Exhibit 10.2 to Fluor's
annual report on Form 10-K for the fiscal year ended October 31,1995
and incorporated herein by this reference]
10.3 Fluor Corporation Deferred Directors' Fees Program (as amended
through November 15, 1983) [filed as Exhibit 10.4 to Fluor's
quarterly report on Form 10-Q for the quarterly period ended April
30,1995 and incorporated herein by reference]
10.4 1977 Fluor Executive Stock Plan (as amended by Amendment No. 4
effective December 9, 1986) [filed as Exhibit 10.6 to Fluor's annual
report on Form 10-K for the fiscal year ended October 31,1986 and
incorporated herein by reference]
10.5 1981 Fluor Executive Stock Plan (as amended by Amendment No. 3
effective December 9, 1986) [filed as Exhibit 10.9 to Fluor's annual
report on Form 10-K for the fiscal year ended October 31, 1986 and
incorporated herein by reference]
<PAGE> 25
Exhibit
Number Description
- ------- -----------
10.6 1982 Fluor Executive Stock Option Plan (as amended by Amendment No. 2
effective December 9, 1986) [filed as Exhibit 10.10 to Fluor's annual
report on Form 10-K for the fiscal year ended October 31, 1986 and
incorporated herein by reference]
10.7 Fluor Executives' Health Plan Summary [filed as Exhibit 10.11 to
Fluor's annual report on Form 10-K for the fiscal year ended October
31, 1985 and incorporated herein by reference]
10.8 Directors' Life Insurance Summary [filed as Exhibit 10(i) to Fluor's
annual report on Form 10-K for the fiscal year ended October 31, 1980
and incorporated herein by reference]
10.9 Executive Tax Services Plan (as amended and effective as of November
1, 1993) [filed as Exhibit 10.10 to Fluor's annual report on Form
10-K for the fiscal year ended October 31, 1993 and incorporated
herein by reference]
10.10 Executive Personal Financial Counseling Plan (as amended and
effective as of November 1, 1993) [filed as Exhibit 10.11 to Fluor's
annual report on Form 10-K for the fiscal year ended October 31, 1993
and incorporated herein by reference]
10.11 Company Automobile Policy Summary [filed as Exhibit 10.15 to Fluor's
annual report on Form 10-K for the fiscal year ended October 31, 1989
and incorporated herein by reference]
10.12 Fluor Executives' Supplemental Benefit Plan (as amended by First
Amendment effective November 15, 1983) [filed as Exhibit 10.16 to
Fluor's annual report on Form 10-K for the fiscal year ended October
31, 1983 and incorporated herein by reference]
10.13 1988 Fluor Executive Stock Plan (as amended and restated effective
December 6, 1994) [filed as Exhibit 10.13 to Fluor's annual report on
Form 10-K for the fiscal year ended October 31, 1995 and incorporated
herein by reference]
10.14 Fluor Corporation Change of Control Compensation Plan (as amended and
restated by Second Amendment effective October 1, 1989) [filed as
Exhibit 10.19 to Fluor's annual report on Form 10-K for the fiscal
year ended October 31, 1989 and incorporated herein by reference]
10.15 Fluor Special Executive Incentive Plan (as amended effective December
6, 1994) [filed as Exhibit 10.15 to Fluor's annual report on Form
10-K for the fiscal year ended October 31, 1995 and incorporated
herein by reference]
10.16 Retirement Plan for Outside Directors (effective as of May 1, 1992)
[filed as Exhibit 10.18 to Fluor's annual report on Form 10-K for the
fiscal year ended October 31, 1992 and incorporated herein by
reference]
10.17 Executive Severance Plan (effective as of April 14, 1997)
10.18 Directors' Achievement Award Program (effective as of December 6,
1994) [filed as Exhibit 10.18 to Fluor's annual report on Form 10-K
for the fiscal year ended October 31, 1995 and incorporated herein by
reference]
10.19 Fluor Corporation Stock Plan for Non-Employee Directors (adopted
effective March 14, 1995) [filed as Exhibit 10.21 to Fluor's
quarterly report on Form 10-Q for the quarterly period ended April
30, 1995 and incorporated herein by reference]
10.20 1996 Fluor Executive Stock Plan (effective March 12, 1996 as amended
December 10, 1996) (filed as Exhibit 10.20 to Fluor's annual report
on Form 10-K for the fiscal year ended October 31, 1996 and
incorporated herein by this reference)
<PAGE> 26
Exhibit
Number Description
- ------- -----------
10.21 Fluor Corporation Restricted Stock Plan for Non-Employee Directors
[filed as Exhibit 10.1 to Fluor's quarterly report as Form 10-Q for
the quarterly period ended April 30, 1997 and incorporated herein by
this reference]
OTHER CONTRACTS
10.22 Concourse Lease dated as of July 26, 1985 between Fluor Corporation
and Fluor Engineers, Inc. (an entity now having the corporate name of
Fluor Daniel, Inc.) with respect to a portion of the International
Headquarters facility located in Irvine, California, formerly owned
by Fluor (the "Irvine facility"); Schedule of substantially identical
Building Pod Lease and Corporate Tower Lease; and Assignment of
Master Leases dated July 26, 1985, assigning Fluor's lessor interest
to Crow Winthrop Operating Partnership ("CWOP") [filed as Exhibit
10.21 to Fluor's annual report on Form 10-K for the fiscal year ended
October 31, 1985 and incorporated herein by reference]
10.23 Amendment to Master Leases by and between CWOP, Fluor Daniel, Inc.
and Fluor Corporation dated as of November 1, 1989 with respect to
the Irvine facility [filed as Exhibit 10.19 to Fluor's annual report
on Form 10-K for the fiscal year ended October 31, 1991 and
incorporated herein by reference]
13 Certain portions of 1997 Annual Report to shareholders (with the
exception of the information incorporated by reference into Items 1,
5, 6, 7 and 8 of this report, Fluor's 1997 Annual Report to
shareholders is not deemed to be filed as part of this report)
21 Fluor Corporation Subsidiaries
23 Consent of Independent Auditors -- Ernst & Young LLP
24.1 Manually signed Powers of Attorney executed by certain Fluor
directors
27 Financial Data Schedule
99.1 Current Report on Form 8-K filed May 6, 1997
(b) Reports on Form 8-K:
None were filed during the last quarter of the period covered by
this report.
<PAGE> 1
EXHIBIT 3.1
RESTATED BYLAWS
(as amended January 7, 1998)
OF
FLUOR CORPORATION
(a Delaware corporation)
ARTICLE I
OFFICES
Section 1.01 Registered Office. The registered office of FLUOR
CORPORATION (hereinafter called the "Corporation") in the State of Delaware
shall be at 32 Loockerman Square, Suite L-100, City of Dover, County of Kent,
and the name of the registered agent at that address shall be The Prentice-Hall
Corporation System, Inc.
Section 1.02 Principal Office. The principal office for the
transaction of the business of the Corporation shall be at 3353 Michelson Drive,
Irvine, California 92698. The Board of Directors (hereinafter called the
"Board") is hereby granted full power and authority to change said principal
office from one location to another.
Section 1.03 Other Offices. The Corporation may also have an
office or offices at such other place or places, either within or without the
State of Delaware, as the Board may from time to time determine or as the
business of the Corporation may require.
ARTICLE II
MEETINGS OF STOCKHOLDERS
Section 2.01 Annual Meetings. Annual meetings of the stockholders
of the Corporation for the purpose of electing directors and for the transaction
of such other proper business as may come before such meetings may be held at
such time, date and place as the Board shall determine by resolution.
Section 2.02 Special Meetings. Special meetings of the
stockholders of the Corporation for any purpose or purposes may be called at any
time by the Board, or by a committee of the Board which has been duly designated
by the Board and whose powers and authority, as provided in a resolution of the
Board or in the Bylaws, include the power to call such meeting, but such special
meetings may not be called by any other person or persons; provided, however,
that if and to the extent that any special meetings of stockholders may be
called by any other person or persons specified in any provisions of the
Certificate of Incorporation or any amendment thereto or any certificate filed
under Section 151(g) of the Delaware General Corporation Law (or its successor
statute as in effect from time to time
<PAGE> 2
hereafter), then such special meeting may also be called by the person or
persons, in the manner, at the times and for the purposes so specified.
Section 2.03 Place of Meetings. All meetings of the stockholders
shall be held at such places, within or without the State of Delaware, as may
from time to time be designated by the person or persons calling the respective
meeting and specified in the respective notices or waivers of notice thereof.
Section 2.04 Notice of Stockholder Business. At an annual meeting
of the stockholders, only such business shall be conducted as shall have been
properly brought before the meeting (a) by or at the direction of the Board of
Directors or (b) by any stockholder of the Corporation who complies with the
notice procedures set forth in this Section 2.04. For business to be properly
brought before an annual meeting by a stockholder, the stockholder must have
given timely notice thereof in writing to the Secretary of the Corporation. To
be timely, a stockholder's notice must be delivered to or mailed and received at
the principal office of the Corporation, not less than 30 days nor more than 60
days prior to the meeting; provided, however, that in the event that less than
40 days' notice or prior public disclosure of the date of the meeting is given
or made to stockholders, notice by the stockholder to be timely must be received
not later than the close of business on the 10th day following the day on which
such notice of the date of the annual meeting was mailed or such public
disclosure was made. A stockholder's notice to the Secretary shall set forth as
to each matter the stockholder proposes to bring before the annual meeting (a) a
brief description of the business desired to be brought before the annual
meeting and the reasons for conducting such business at the annual meeting, (b)
the name and address, as they appear on the books of the Corporation, of the
stockholder proposing such business, (c) the class and number of shares of the
Corporation which are beneficially owned by the stockholder, and (d) any
material interest of the stockholder in such business. Notwithstanding anything
in the Bylaws to the contrary, no business shall be conducted at an annual
meeting except in accordance with the procedures set forth in this Section 2.04.
The Chairman of an annual meeting shall, if the facts warrant, determine and
declare to the meeting that business was not properly brought before the meeting
in accordance with the provisions of this Section 2.04, and if he or she should
so determine, he or she shall so declare to the meeting and any such business
not properly brought before the meeting shall not be transacted.
Section 2.05 Notice of Meetings. Except as otherwise required by
law, notice of each meeting of the stockholders, whether annual or special,
shall be given not less than 10 nor more than 60 days before the date of the
meeting to each stockholder of record entitled to vote at such meeting by
delivering a typewritten or printed notice thereof to him or her personally, or
by depositing such notice in the United States mail, in a postage prepaid
envelope, directed to him or her at his or her post office address furnished by
him or her to the Secretary of the Corporation for such purpose or, if he or she
shall not have furnished to the Secretary his or her address for such purposes,
then at his or her post office address last known to the Secretary, or by
transmitting a notice thereof to him or her at such address by telegraph, cable
or wireless. Except as otherwise expressly required by law, no publication of
any notice of a meeting of the stockholders shall be required. Every notice of a
meeting of the stockholders shall state the place, date and hour of the meeting,
and, in the case of a special meeting, shall also state the
2
<PAGE> 3
purpose or purposes for which the meeting is called. Notice of any meeting of
stockholders shall not be required to be given to any stockholder who shall have
waived such notice and such notice shall be deemed waived by any stockholder who
shall attend such meeting in person or by proxy, except a stockholder who shall
attend such meeting for the express purpose of objecting, at the beginning of
the meeting, to the transaction of any business because the meeting is not
lawfully called or convened. Except as otherwise expressly required by law,
notice of any adjourned meeting of the stockholders need not be given if the
time and place thereof are announced at the meeting at which the adjournment is
taken.
Section 2.06 Quorum. Except in the case of any meeting for the
election of directors summarily ordered as provided by law, the holders of
record of a majority in voting interest of the shares of stock of the
Corporation entitled to be voted thereat, present in person or by proxy, shall
constitute a quorum for the transaction of business at any meeting of the
stockholders of the Corporation or any adjournment thereof. In the absence of a
quorum at any meeting or any adjournment thereof, a majority in voting interest
of the stockholders present in person or by proxy and entitled to vote thereat
or, in the absence therefrom of all the stockholders, any officer entitled to
preside at, or to act as secretary of, such meeting may adjourn such meeting
from time to time. At any such adjourned meeting at which a quorum is present
any business may be transacted which might have been transacted at the meeting
as originally called.
Section 2.07 Voting.
(a) Each stockholder shall, at each meeting of the stockholders,
be entitled to vote in person or by proxy each share or fractional share of the
stock of the Corporation having voting rights on the matter in question and
which shall have been held by him or her and registered in his or her name on
the books of the Corporation:
(i) on the date fixed pursuant to Section 6.05 of the
Bylaws as the record date for the determination of stockholders entitled to
notice of and to vote at such meeting, or
(ii) if no such record date shall have been so fixed,
then (a) at the close of business on the day next preceding the day on which
notice of the meeting shall be given or (b) if notice of the meeting shall be
waived, at the close of business on the day next preceding the day on which
meeting shall be held.
(b) Shares of its own stock belonging to the Corporation or to
another corporation, if a majority of the shares entitled to vote in the
election of directors in such other corporation is held, directly or indirectly,
by the Corporation, shall neither be entitled to vote nor be counted for quorum
purposes. Persons holding stock of the Corporation in a fiduciary capacity shall
be entitled to vote such stock. Persons whose stock is pledged shall be entitled
to vote, unless in the transfer by the pledgor on the books of the Corporation
he or she shall have expressly empowered the pledgee to vote thereon, in which
case only the pledgee, or his or her proxy, may represent such stock and vote
thereon. Stock having voting power standing of record in the names of two or
more persons, whether fiduciaries, members of a partnership, joint tenants,
tenants in common, tenants by the entirety or otherwise, or with respect to
which two or more
3
<PAGE> 4
persons have the same fiduciary relationship, shall be voted in accordance with
the provisions of the General Corporation Law of the State of Delaware.
(c) Any such voting rights may be exercised by the stockholder
entitled thereto in person or by his or her proxy appointed by an instrument in
writing, subscribed by such stockholder or by his or her attorney thereunto
authorized and delivered to the secretary of the meeting; provided, however,
that no proxy shall be voted or acted upon after three years from its date
unless said proxy shall provide for a longer period. The attendance at any
meeting of a stockholder who may theretofore have given a proxy shall not have
the effect of revoking the same unless he or she shall in writing so notify the
secretary of the meeting prior to the voting of the proxy. At any meeting of the
stockholders all matters, except as otherwise provided in the Certificate of
Incorporation, in the Bylaws or by law, shall be decided by the vote of a
majority in voting interest of the stockholders present in person or by proxy
and entitled to vote thereat and thereon, a quorum being present. The vote at
any meeting of the stockholders on any question need not be by ballot, unless so
directed by the chairman of the meeting. On a vote by ballot each ballot shall
be signed by the stockholder voting, or by his or her proxy, if there be such
proxy, and it shall state the number of shares voted.
Section 2.08 List of Stockholders. The Secretary of the
Corporation shall prepare and make, at least 10 days before every meeting of
stockholders, a complete list of the stockholders entitled to vote at the
meeting, arranged in alphabetical order, and showing the address of each
stockholder and the number of shares registered in the name of each stockholder.
Such list shall be open to the examination of any stockholder, for any purpose
germane to the meeting, during ordinary business hours, for a period of at least
10 days prior to the meeting, either at a place within the city where the
meeting is to be held, which place shall be specified in the notice of the
meeting, or, if not so specified, at the place where the meeting is to be held.
The list shall also be produced and kept at the time and place of the meeting
during the entire duration thereof, and may be inspected by any stockholder who
is present.
Section 2.09 Judges. If at any meeting of the stockholders a vote
by written ballot shall be taken on any question, the chairman of such meeting
may appoint a judge or judges to act with respect to such vote. Each judge so
appointed shall first subscribe an oath faithfully to execute the duties of a
judge at such meeting with strict impartiality and according to the best of his
or her ability. Such judges shall decide upon the qualification of the voters
and shall report the number of shares represented at the meeting and entitled to
vote on such question, shall conduct and accept the votes, and, when the voting
is completed shall ascertain and report the number of shares voted respectively
for and against the question. Reports of the judges shall be in writing and
subscribed and delivered by them to the Secretary of the Corporation. The judges
need not be stockholders of the Corporation, and any officer of the Corporation
may be a judge on any question other than a vote for or against a proposal in
which he or she shall have a material interest.
4
<PAGE> 5
ARTICLE III
BOARD OF DIRECTORS
Section 3.01 General Powers. The property, business and affairs
of the Corporation shall be managed by the Board.
Section 3.02 Number. The authorized number of directors of the
Corporation shall be thirteen and such authorized number shall not be changed
except by a Bylaw or amendment thereof duly adopted by the stockholders in
accordance with the Certificate of Incorporation or by the Board amending this
Section 3.02.
Section 3.03 Election of Directors. The directors shall be
elected by the stockholders of the Corporation, and at each election the persons
receiving the greatest number of votes, up to the number of directors then to be
elected, shall be the persons then elected. The election of directors is subject
to any provisions contained in the Certificate of Incorporation relating
thereto, including any provisions for a classified board and for cumulative
voting.
Section 3.04 Notice of Stockholder Nominees. Only persons who are
nominated in accordance with the procedures set forth in the Bylaws shall be
eligible for election as directors. Nominations of persons for election to the
Board of Directors of the Corporation may be made at a meeting of stockholders
(a) by or at the direction of the Board of Directors or (b) by any stockholder
of the Corporation entitled to vote for the election of directors at the meeting
who complies with the notice procedures set forth in this Section 3.04. Such
nominations, other than those made by or at the direction of the Board of
Directors, shall be made pursuant to timely notice in writing to the Secretary
of the Corporation. To be timely, a stockholder's notice shall be delivered to
or mailed and received at the principal office of the Corporation not less than
30 days nor more than 60 days prior to the meeting; provided, however, that in
the event that less than 40 days' notice or prior public disclosure of the date
of the meeting is given or made to stockholders, notice by the stockholder to be
timely must be received not later than the close of business on the 10th day
following the day on which such notice of the date of the meeting was mailed or
such public disclosure was made. Such stockholder's notice shall set forth (a)
as to each person whom the stockholder proposes to nominate for election or
re-election as a director, all information relating to such person that is
required to be disclosed in solicitations of proxies for election of directors,
or is otherwise required, in each case pursuant to Regulation 14A under the
Securities Exchange Act of 1934, as amended (including without limitation such
person's written consent to be named in the proxy statement as a nominee and to
serve as a director if elected); and (b) as to the stockholder proposing such
nomination (i) the name and address, as they appear on the books of the
Corporation, of such stockholder, and (ii) the class and number of shares of the
Corporation which are beneficially owned by such stockholder. At the request of
the Board of Directors any person nominated by the Board of Directors for
election as a director shall furnish to the Secretary of the Corporation that
information required to be set forth in a stockholder's notice of nomination
which pertains to the nominee. No person shall be eligible for election as a
director of the Corporation unless nominated in accordance with the procedures
set forth in the Bylaws. The Chairman of the meeting shall, if the facts
warrant, determine and declare to the meeting that a nomination was not made in
accordance with the procedures
5
<PAGE> 6
prescribed by the Bylaws, and if he or she should so determine, he or she shall
so declare to the meeting and the defective nomination shall be disregarded.
Section 3.05 Mandatory Retirement. The Chairman of the Board and
the President and any former Chairman of the Board and any former President, if
serving as a director of the Corporation at age 72, shall retire from the Board
at the end of the calendar year in which his or her 72nd birthday occurs. Each
other employee or former employee of the Corporation or its subsidiaries serving
as a director of the Corporation at age 65 shall retire from the Board at the
end of the calendar year in which his or her 65th birthday occurs unless the
Chairman of the Board recommends and the Board approves his or her continued
service as a non-employee director. Each other employee of the Corporation or
its subsidiaries under age 65 serving as a director of the Corporation who
elects to take early retirement or who for any other reason is no longer an
officer of the Corporation or its subsidiaries shall retire from the Board as of
the date he or she ceases to be an officer unless the Chairman of the Board
recommends and the Board approves his or her continued directorship. Each
non-employee director of the Corporation serving at age 72 shall retire from the
Board at the end of the calendar year in which his or her 72nd birthday occurs.
For purposes of this Section, "end of the calendar year" shall include the
period ending with the seventh day of January next following.
Section 3.06 Resignations. Any director of the Corporation may
resign at any time by giving written notice to the Board or to the Secretary of
the Corporation. Any such resignation shall take effect at the time specified
therein, or, if the time be not specified, it shall take effect immediately upon
its receipt; and, unless otherwise specified therein, the acceptance of such
resignation shall not be necessary to make it effective.
Section 3.07 Vacancies. Except as otherwise provided in the
Certificate of Incorporation, any vacancy in the Board, whether because of
death, resignation, disqualification, an increase in the number of directors, or
any other cause, may be filled by vote of the majority of the remaining
directors, although less than a quorum. Each director so chosen to fill a
vacancy shall hold office until his or her successor shall have been elected and
shall qualify or until he or she shall resign or shall have been removed.
Section 3.08 Place of Meeting, etc. The Board may hold any of its
meetings at such place or places within or without the State of Delaware as the
Board may from time to time by resolution designate or as shall be designated by
the person or persons calling the meeting or in the notice or a waiver of notice
of any such meeting. Directors may participate in any regular or special meeting
of the Board by means of conference telephone or similar communications
equipment pursuant to which all persons participating in the meeting of the
Board can hear each other, and such participation shall constitute presence in
person at such meeting.
Section 3.09 First Meeting. The Board shall meet as soon as
practicable after each annual election of directors and notice of such first
meeting shall not be required.
Section 3.10 Regular Meetings. Regular meetings of the Board may
be held at such times as the Board shall from time to time by resolution
determine. If any day fixed for a meeting shall be a legal holiday at the place
where the meeting is to be held, then the meeting
6
<PAGE> 7
shall be held at the same hour and place on the next succeeding business day not
a legal holiday. Except as provided by law, notice of regular meetings need not
be given.
Section 3.11 Special Meetings. Special meetings of the Board may
be called at any time by the Chairman of the Board or the President or by any
two directors, to be held at the principal office of the Corporation, or at such
other place or places, within or without the State of Delaware, as the person or
persons calling the meeting may designate.
Notice of all special meetings of the Board shall be given to
each director by two days' service of the same by telegram, by letter, or
personally. Such notice may be waived by any director and any meeting shall be a
legal meeting without notice having been given if all the directors shall be
present thereat or if those not present shall, either before or after the
meeting, sign a written waiver of notice of, or a consent to, such meeting or
shall after the meeting sign the approval of the minutes thereof. All such
waivers, consents or approvals shall be filed with the corporate records or be
made a part of the minutes of the meeting.
Section 3.12 Quorum and Manner of Acting. Except as otherwise
provided in the Bylaws or by law, the presence of a majority of the authorized
number of directors shall be required to constitute a quorum for the transaction
of business at any meeting of the Board, and all matters shall be decided at any
such meeting, a quorum being present, by the affirmative votes of a majority of
the directors present. In the absence of a quorum, a majority of directors
present at any meeting may adjourn the same from time to time until a quorum
shall be present. Notice of any adjourned meeting need not be given. The
directors shall act only as a Board, and the individual directors shall have no
power as such.
Section 3.13 Action by Consent. Any action required or permitted
to be taken at any meeting of the Board or of any committee thereof may be taken
without a meeting if a written consent thereto is signed by all members of the
Board or of such committee, as the case may be, and such written consent is
filed with the minutes of proceedings of the Board or such committee.
Section 3.14 Compensation. No stated salary need be paid
directors, as such, for their services, but, by resolution of the Board, a fixed
sum and expenses of attendance, if any, may be allowed for attendance at each
regular or special meeting of the Board or an annual directors' fee may be paid;
provided that nothing herein contained shall be construed to preclude any
director from serving the Corporation in any other capacity and receiving
compensation therefore. Members of special or standing committees may be allowed
like compensation for attending committee meetings.
Section 3.15 Committees. The Board may, by resolution passed by a
majority of the whole Board, designate one or more committees, each committee to
consist of one or more of the directors of the Corporation. Former employees of
the Corporation or its subsidiaries who are no longer officers of the
Corporation or its subsidiaries, if serving as a director of the Corporation,
shall not be eligible to serve as a member of any committee of the Board. Except
as otherwise provided in the Board resolution designating a committee, the
presence of a majority of the authorized number of members of such committee
shall be required to constitute a quorum for
7
<PAGE> 8
the transaction of business at any meeting of such committee. Any such
committee, to the extent provided in the resolution of the Board, shall have and
may exercise all the powers and authority of the Board in the management of the
business and affairs of the Corporation, and may authorize the seal of the
Corporation to be affixed to all papers which may require it; but no such
committee shall have any power or authority in reference to amending the
Certificate of Incorporation, adopting an agreement of merger or consolidation,
recommending to the stockholders the sale, lease or exchange of all or
substantially all of the Corporation's property and assets, recommending to the
stockholders a dissolution of the Corporation or a revocation of the
dissolution, or amending the Bylaws of the Corporation; and unless the
resolution of the Board expressly so provides, no such committee shall have the
power or authority to declare a dividend or to authorize the issuance of stock.
Any such committee shall keep written minutes of its meetings and report the
same to the Board at the next regular meeting of the Board.
Section 3.16 Officers of the Board. The Board shall have a
Chairman of the Board and may, at the discretion of the Board, have a Vice
Chairman and other officers. The Chairman of the Board and the Vice Chairman
shall be appointed from time to time by the Board, unless such positions are
elected offices of the Corporation, currently filled, and shall have such powers
and duties as shall be designated by the Board.
ARTICLE IV
OFFICERS
Section 4.01 Officers. The officers of the Corporation shall be a
Chairman of the Board, a Chief Executive Officer, a Secretary, a Treasurer and
such other officers as may be appointed by the Board as the business of the
Corporation may require. Officers shall have such powers and duties as are
permitted or required by law or as may be specified by or in accordance with
resolutions of the Board. Any number of offices may be held by the same person.
Unless the Board shall otherwise determine, the Chairman of the Board shall be
the Chief Executive Officer of the Corporation. In the absence of any contrary
determination by the Board, the Chief Executive Officer shall, subject to the
power and authority of the Board, have general supervision, direction and
control of the officers, employees, business and affairs of the Corporation.
Section 4.02 Election and Term. The officers of the Corporation
shall be elected annually by the Board. The Board may at any time and from time
to time elect such additional officers as the business of the Corporation may
require. Each officer shall hold his or her office until his or her successor is
elected and qualified or until his or her earlier resignation or removal.
Section 4.03 Removal and Resignation. Any officer may be removed,
either with or without cause, by a majority of the directors at the time in
office, at any regular or special meeting of the Board. Any officer may resign
at any time by giving notice to the Board. Such resignation shall take effect at
the time specified in such notice or, in the absence of such specification, at
the date of the receipt by the Board of such notice. Unless otherwise specified
in such notice, the acceptance of such resignation shall not be necessary to
make it effective.
8
<PAGE> 9
Section 4.04 Vacancies. Any vacancy occurring in any office of
the Corporation by death, resignation, removal or otherwise, shall be filled in
the manner prescribed in these Bylaws for the regular appointment to such
office.
ARTICLE V
CONTRACTS, CHECKS, DRAFTS, BANK ACCOUNTS, ETC.
Section 5.01 Execution of Contracts. The Board, except as in the
Bylaws otherwise provided, may authorize any officer or officers, agent or
agents, to enter into any contract or execute any instrument in the name and on
behalf of the Corporation, and such authority may be general or confined to
specific instances; and unless so authorized by the Board or by the Bylaws, no
officer, agent or employee shall have any power or authority to bind the
Corporation by any contract or engagement or to pledge its credit or to render
it liable for any purpose or in any amount.
Section 5.02 Checks, Drafts, etc. All checks, drafts or other
orders for payment of money, notes or other evidence of indebtedness, issued in
the name of or payable to the Corporation, shall be signed or endorsed by such
person or persons and in such manner as, from time to time, shall be determined
by resolution of the Board. Each such person shall give such bond, if any, as
the Board may require.
Section 5.03 Deposit. All funds of the Corporation not otherwise
employed shall be deposited from time to time to the credit of the Corporation
in such banks, trust companies or other depositories as the Board may select, or
as may be selected by any officer or officers, assistant or assistants, agent or
agents, or attorney or attorneys of the Corporation to whom such power shall
have been delegated by the Board. For the purpose of deposit and for the purpose
of collection for the account of the Corporation, the Chief Executive Officer,
the President or the Treasurer (or any other officer or officers, assistant or
assistants, agent or agents, or attorney or attorneys of the Corporation who
shall from time to time be determined by the Board) may endorse, assign and
deliver checks, drafts and other orders for the payment of money which are
payable to the order of the Corporation.
Section 5.04 General and Special Bank Accounts. The Board may
from time to time authorize the opening and keeping of general and special bank
accounts with such banks, trust companies or other depositories as the Board may
select or as may be selected by any officer or officers, assistant or
assistants, agent or agents, or attorney or attorneys of the Corporation to whom
such power shall have been delegated by the Board. The Board may make such
special rules and regulations with respect to such bank accounts, not
inconsistent with the provisions of the Bylaws, as it may deem expedient.
9
<PAGE> 10
ARTICLE VI
SHARES AND THEIR TRANSFER
Section 6.01 Certificates for Stock. Every owner of stock of the
Corporation shall be entitled to have a certificate or certificates, to be in
such form as the Board shall prescribe, certifying the number and class of
shares of the stock of the Corporation owned by him or her. The certificates
representing shares of such stock shall be numbered in the order in which they
shall be issued and shall be signed in the name of the Corporation by the
President and by the Secretary. Any or all of the signatures on the certificates
may be a facsimile. In case any officer, transfer agent or registrar who has
signed or whose facsimile signature has been placed upon any such certificate
shall thereafter have ceased to be such officer, transfer agent or registrar
before such certificate is issued, such certificate may nevertheless be issued
by the Corporation with the same effect as though the person who signed such
certificate, or whose facsimile signature shall have been placed thereupon, were
such officer, transfer agent or registrar at the date of issue. A record shall
be kept of the respective names of the persons, firms or corporations owning the
stock represented by such certificates, the number and class of shares
represented by such certificates, respectively, and the respective dates
thereof, and in case of cancellation the respective dates of cancellation. Every
certificate surrendered to the Corporation for exchange or transfer shall be
cancelled, and no new certificate or certificates shall be issued in exchange
for any existing certificate until such existing certificate shall have been so
cancelled, except in cases provided for in Section 6.04 of the Bylaws.
Section 6.02 Transfers of Stock. Transfers of shares of stock of
the Corporation shall be made only on the books of the Corporation by the
registered holder thereof, or by his or her attorney thereunto authorized by
power of attorney duly executed and filed with the Secretary, or with a transfer
clerk or a transfer agent appointed as provided in Section 6.03 of the Bylaws,
and upon surrender of the certificate or certificates for such shares properly
endorsed and the payment of all taxes thereon. The person in whose name shares
of stock stand on the books of the Corporation shall be deemed the owner thereof
for all purposes as regards the Corporation. Whenever any transfer of shares
shall be made for collateral security, and not absolutely, such fact shall be
stated expressly in the entry of transfer if, when the certificate or
certificates shall be presented to the Corporation for transfer, both the
transferor and the transferee request the Corporation to do so.
Section 6.03 Regulations. The Board may make such rules and
regulations as it may deem expedient, not inconsistent with the Bylaws,
concerning the issue, transfer and registration of certificates for shares of
the stock of the Corporation. It may appoint, or authorize any officer or
officers to appoint, one or more transfer clerks or one or more transfer agents
and one or more registrars, and may require all certificates for stock to bear
the signature or signatures of any of them.
Section 6.04 Lost, Stolen, Destroyed, And Mutilated Certificates.
In any case of loss, theft, destruction, or mutilation of any certificate of
stock, another may be issued in its place upon proof of such loss, theft,
destruction, or mutilation and upon the giving of a bond of indemnity to the
Corporation in such form and in such sum as the Board may direct; provided,
10
<PAGE> 11
however, that a new certificate may be issued without requiring any bond when,
in the judgment of the Board, it is proper so to do.
Section 6.05 Fixing Date for Determination of Stockholders of
Record. In order that the Corporation may determine the stockholders entitled to
notice of or to vote at any meeting of stockholders or any adjournment thereof,
or entitled to receive payment of any dividend or other distribution or
allotment of any rights, or entitled to exercise any rights in respect of any
other change, conversion or exchange of stock or for the purpose of any other
lawful action, the Board may fix, in advance, a record date, which shall not be
more than 60 nor less than 10 days before the date of such meeting, nor more
than 60 days prior to any other action. If, in any case involving the
determination of stockholders for any purpose other than notice of or voting at
a meeting of stockholders, the Board shall not fix such a record date, the
record date for determining stockholders for such purpose shall be the close of
business on the day on which the Board shall adopt the resolution relating
thereto. A determination of stockholders entitled to notice of or to vote at a
meeting of stockholders shall apply to any adjournment of such meeting;
provided, however, that the Board may fix a new record date for the adjourned
meeting.
ARTICLE VII
MISCELLANEOUS
Section 7.01 Seal. The Board shall provide a corporate seal,
which shall be in the form of a circle and shall bear the name of the
Corporation and words and figures showing that the Corporation was incorporated
in the State of Delaware and the year of incorporation.
Section 7.02 Waiver of Notices. Whenever notice is required to be
given by the Bylaws or the Certificate of Incorporation or by law, the person
entitled to said notice may waive such notice in writing, either before or after
the time stated therein, and such waiver shall be deemed equivalent to notice.
Section 7.03 Fiscal Year. The fiscal year of the Corporation
shall end on the 31st day of October of each year.
Section 7.04 Amendments. The Bylaws, or any of them, may be
rescinded, altered, amended or repealed, and new Bylaws may be made, (i) by the
Board, by vote of a majority of the number of directors then in office as
directors, acting at any meeting of the Board, or (ii) by the vote of the
holders of not less than 80% of the total voting power of all outstanding shares
of voting stock of the Corporation, at any annual meeting of stockholders,
without previous notice, or at any special meeting of stockholders, provided
that notice of such proposed amendment, modification, repeal or adoption is
given in the notice of special meeting. Any Bylaws made or altered by the
stockholders may be altered or repealed by the Board or may be altered or
repealed by the stockholders.
11
<PAGE> 1
EXHIBIT 10.17
[LOGO] FLUOR CORPORATION AND SUBSIDIARIES
Management Manual
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OBJECTIVE
To provide severance compensation to eligible officers of Fluor Corporation and
designated subsidiaries (the company) who leave the company, depending on the
circumstances and conditions leading to termination.
ELIGIBILITY
Executives of Fluor Corporation and designated subsidiaries actively at work who
are participants in the Fluor Corporation and Subsidiaries Executive Incentive
Compensation Plan.
DEFINITIONS
For the purpose of the Plan, the following definitions apply:
A. Voluntary Separation
--------------------
Action taken by an executive for personal reasons, to seek other
employment, to accept another position, for failure to return at
conclusion of leave, or to voluntarily retire.
B. Involuntary Separation
----------------------
1. Action taken by the company due to reduction in force resulting from
reorganization or reduced workload or other similar circumstances
whereby the executive's services are no longer required on the job.
Executives involuntarily separated who meet the retirement criteria may
elect retirement.
2. Action taken by the company when an executive is covered by the
Americans with Disabilities Act and is unable to perform his/her
essential job functions with reasonable accommodation.
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C. Involuntary Discharge
---------------------
Action taken by the company for reasons other than stated in Paragraph
B. above including but not limited to absenteeism, misconduct,
insubordination, appearing at work under the influence of a controlled
substance or alcohol, unethical behavior, disclosure of confidential
information, sexual harassment, employment discrimination, or
unsatisfactory performance.
D. Officer
-------
An executive who is a vice president or above of Fluor Corporation,
Fluor Daniel, Inc., or Fluor Constructors, Inc., who participates in
the Fluor Corporation and Subsidiaries Executive Incentive Compensation
Plan.
E. Completed Years of Accumulated Service
--------------------------------------
A period of accumulated service with the company, subject to the
limitation set forth under Procedure, A.2.b. (3).
F. Beneficiary
-----------
The beneficiary designated by the executive under the Fluor Corporation
Employee's Retirement Plan, or, if no such designation has been made,
then as designated under the Group Life/Health Insurance Plan unless
the executive otherwise makes a beneficiary designation on the form
provided by the executive's corporate employer, or, in the absence of
any designation, the administrator or executor of the executive's
estate.
PROCEDURE
A. Severance Pay
-------------
1. Voluntary Separation
--------------------
The company will not provide severance pay nor prorated
Incentive Compensation (See Paragraph B).
2
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A. Severance Pay (Continued)
-------------
2. Involuntary Separation
----------------------
a. Severance pay will be based on current base salary and total
completed years of accumulated service as follows:
(1) Officers:
(a) Two weeks' severance pay for each completed
year of accumulated service up to 52 weeks.
(b) Minimum eight weeks severance.
(2) Non-officer Executives:
(a) Two weeks severance pay for each completed
year of service up to 26 weeks.
(b) Minimum four weeks' severance.
b. Limitations
(1) Maximum severance pay will be 52 weeks for officers,
26 weeks for non-officer executives.
(2) Minimum severance pay will be eight weeks for
officers, four weeks for non-officer executives.
(3) The total completed years of accumulated service
calculated for a severance payment may only be used
one time in severance calculations.
(4) For executives involuntarily separated and placed on
Leave of Absence in Lieu of Layoff, severance pay
will be based on completed years of accumulated
service up to the effective date of the Leave of
Absence.
(5) Officers in policy making positions who meet
retirement criteria will receive severance pay as
follows:
3
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A. Severance Pay (Continued)
-------------
2. Involuntary Separation (Continued)
----------------------
(a) Officers who meet the minimum retirement
income requirement set forth by federal law,
excluding any amount payable under this
Plan, will receive severance pay for only
the period from the date of termination
until January 2 following the officer's 65th
birthday subject to the limitation set forth
under procedure, A.2.a.
(b) Officers who do not meet the minimum
retirement income requirement set forth by
federal law, computed excluding any amount
payable under this Plan, will receive
severance pay as determined under Paragraph
A.2.a. above.
(6) In the case of involuntary separation due to an
executive's inability to perform his/her essential
job functions with reasonable accommodation, the
executive's severance pay amount will be reduced by
the expected entitlements under Fluor's short-term
and long-term disability for the number of weeks
determined under Paragraph A.2.a. above. If the
actual entitlements received by the employee are less
than that deducted from severance pay, the employee
will be paid the difference for the period of weeks
for which the employee received severance. This
provision is not intended to affect any state or
federal benefits to which the executive may be
entitled.
(7) In cases where the officer is entitled to legislated
severance pay in non-U.S. countries, the executive's
severance pay amount will be reduced by any
legislated severance payments required of the company
that are calculated with reference to the number of
weeks determined under Paragraph A.2.a. above.
4
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A. Severance Pay (Continued)
-------------
2. Involuntary Separation (Continued)
----------------------
c. Severance pay will be paid in a lump sum, or
at the discretion of the company, annual
installments over a period not to exceed the
total number of weeks determined under
Paragraph A.2.a. and b. above.
d. In the event of an officer's death prior to
payment of the entire entitlement, payment
may be made to the designated beneficiary in
one lump sum or by continuation of
installments at the discretion of the
executive's corporate employer.
3. Involuntary Discharge
---------------------
The company will not provide severance pay nor consider
proration of Incentive Compensation (See Paragraph B).
B. Incentive Compensation
----------------------
(As defined in the Executive Incentive Compensation Plan, Fluor
Corporation and Subsidiaries Management Manual).
1. Voluntary Separation
--------------------
The company will not provide a prorated incentive award.
2. Involuntary Separation
----------------------
Incentive Compensation may be considered based on the number
of completed months of service during the current fiscal year
prior to termination and consistent with the administration of
the Plan during the year of termination.
3. Involuntary Discharge
---------------------
The company will not provide a prorated incentive award.
5
<PAGE> 6
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C. Company Automobiles
-------------------
In company locations where officers/directors may be assigned
company-owned automobiles, the following will apply:
1. Voluntary Separation
--------------------
Officers/directors who voluntarily retire will be presented
with the automobile which is currently assigned as a gift.
2. Involuntary Separation
----------------------
Officers/directors who are requested to take early retirement
will be presented with the automobile which is currently
assigned as a gift.
3. Involuntary Discharge
---------------------
Officers/directors will not be given an automobile, and it
will not be available for purchase.
D. Club Membership
---------------
Company memberships will not be awarded regardless of reason for
termination.
E. Automobile Allowance
--------------------
In locations where executives receive a car allowance/insurance, the
following will apply:
1. Voluntary Separation
--------------------
The company will no longer provide a car allowance/insurance.
2. Involuntary Separation
----------------------
The company will no longer provide a car allowance/insurance.
6
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E. Automobile Allowance (Continued)
--------------------
3. Involuntary Discharge
---------------------
The company will no longer provide a car allowance/insurance.
F. Insurance Coverage
------------------
Applicable insurance coverage, i.e., group health, long-term
disability, executive health, etc., will cease on date of termination.
Where applicable, departing officer may elect continued coverage
through the Consolidated Omnibus Budget Reconciliation Act (COBRA).
G. Time Off With Pay-(TOWP) Program
--------------------------------
Balance will be paid at time of termination.
H. Stock Based Awards
------------------
1. Voluntary Separation
--------------------
Upon qualified retirement, awards become 100 percent vested.
2. Involuntary Separation
----------------------
Upon qualified retirement, awards become 100 percent vested.
3. Involuntary Discharge
---------------------
Vested portion may be exercised.
I. Longer-Term Incentive (LTI) Program
-----------------------------------
Applicable cash awards under the long-term incentive program will not
be prorated for any reason, except death or total and permanent
disability.
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J. Waivers
-------
The company will comply with the requirements of the Older Workers'
Benefit Protection Act. In accordance with this Act, a settlement
agreement and release form must be obtained from employees in exchange
for severance benefits.
K. Outplacement
------------
In-house outplacement services are available.
L. Plan Termination
----------------
This Plan will expire 12 months from the effective date. Any executive
whose employment terminates after the Plan expires will not be eligible
for participation in the Plan. Further, no benefits will accrue or be
payable under the Plan after the Plan terminates.
M. Exception
---------
Approved by the Chief Executive Officer of Fluor Corporation and the
Chief Operating Officer of Fluor Daniel, Inc.
8
<PAGE> 1
EXHIBIT 13
OPERATING STATISTICS
<TABLE>
<CAPTION>
1997 1996 1995 1994 1993 1992 1991 1990 1989 1988
-------- -------- -------- -------- -------- -------- -------- -------- -------- --------
$ in millions/Year ended October 31,
ENGINEERING AND CONSTRUCTION
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Work performed $12,795 $ 9,870 $ 8,379 $ 7,673 $ 7,110 $ 5,889 $ 5,792 $6,353 $5,241 $4,268
Revenues 13,218 10,054 8,452 7,718 7,134 5,904 5,813 6,383 5,312 4,225
Operating profit 122 320 286 259 221 191 166 135 117 51
New awards 12,122 12,488 10,257 8,072 8,001 10,868 8,532 7,632 7,135 5,955
Backlog $14,370 $15,757 $14,725 $14,022 $14,754 $14,706 $11,181 $9,558 $8,361 $6,659
Salaried employees 30,347 26,568 18,090 16,433 17,215 17,443 17,602 19,829 17,519 15,576
------- ------- ------- ------- ------- ------- ------- ------ ------ -------
</TABLE>
The Industry Group backlog information that follows and the information
concerning new awards appearing in Management's Discussion and Analysis on
pages 24 to 28 of this annual report, are presented on the basis of Fluor
Daniel's organizational alignment in place in 1997 and prior.
<TABLE>
<CAPTION>
1997 1996 1995 1994 1993 1992 1991 1990
---------- --------- --------- -------- -------- -------- --------- ---------
$ in millions/At October 31,
BACKLOG BY GROUP AND LOCATION
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Process $ 6,384 $ 4,903 $ 6,671 $ 7,668 $ 7,430 $ 6,305 $ 5,043 $4,434
44% 31% 45% 55% 50% 43% 45% 46%
Industrial 5,178 6,496 4,516 3,564 3,449 3,737 4,127 3,592
36% 41% 31% 25% 23% 25% 37% 38%
Power/Government 2,092 3,621 3,275 2,369 3,212 3,804 1,445 1,058
15% 23% 22% 17% 22% 26% 13% 11%
Diversified Services 716 737 263 421 663 860 566 474
5% 5% 2% 3% 5% 6% 5% 5%
------- ------- ------- ------- ------- ------- ------- ------
Total backlog $14,370 $15,757 $14,725 $14,022 $14,754 $14,706 $11,181 $9,558
100% 100% 100% 100% 100% 100% 100% 100%
======= ======= ======= ======= ======= ======= ======= ======
United States $ 5,665 $ 7,326 $ 6,666 $ 6,802 $ 9,045 $10,649 $ 7,915 $6,724
39% 46% 45% 49% 61% 72% 71% 70%
Asia Pacific (includes Australia) 3,959 4,402 3,303 1,662 1,679 608 377 812
28% 28% 23% 12% 11% 4% 3% 9%
EAME* 3,828 2,677 3,088 4,387 3,178 2,389 2,174 1,345
27% 17% 21% 31% 22% 17% 20% 14%
Americas 918 1,352 1,668 1,171 852 1,060 715 667
6% 9% 11% 8% 6% 7% 6% 7%
------- ------- ------- ------- ------- ------- ------- ------
Total backlog $14,370 $15,757 $14,725 $14,022 $14,754 $14,706 $11,181 $9,558
100% 100% 100% 100% 100% 100% 100% 100%
======= ======= ======= ======= ======= ======= ======= ======
</TABLE>
* EAME represents Europe, Africa and the Middle East.
<TABLE>
<CAPTION>
1989 1988
-------- --------
$ in millions/At October 31,
BACKLOG BY GROUP AND LOCATION
<S> <C> <C>
Process $ 3,144 $ 2,612
38% 39%
Industrial 4,136 3,100
49% 47%
Power/Government 777 847
9% 13%
Diversified Services 304 100
4% 1%
------- -------
Total backlog $ 8,361 $ 6,659
100% 100%
======= =======
United States $ 6,404 $ 5,298
77% 80%
Asia Pacific (includes Australia) 287 251
3% 4%
EAME* 634 494
8% 7%
Americas 1,036 616
12% 9%
------- -------
Total backlog $ 8,361 $ 6,659
100% 100%
======= =======
</TABLE>
*EAME represents Europe, Africa and the Middle East.
<TABLE>
<CAPTION>
1997 1996 1995 1994 1993 1992 1991 1990
---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
$ in thousands/in thousands of short tons/
Year ended October 31,
COAL
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Revenues $1,081,026 $ 960,827 $ 849,758 $ 767,725 $ 716,591 $ 696,721 $ 758,481 $ 865,809
Operating profit $ 154,766 $ 134,526 $ 111,033 $ 95,198 $ 70,680 $ 80,281 $ 60,709 $ 60,241
Produced coal sold
Steam coal 19,300 17,520 15,777 16,702 16,036 13,711 13,536 13,058
Metallurgical coal 16,343 13,571 11,633 7,133 5,156 3,827 3,446 5,538
---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
Total produced coal sold 35,643 31,091 27,410 23,835 21,192 17,538 16,982 18,596
Purchased coal sold * * * 1,284 2,302 4,402 6,578 7,989
Total employees 2,968 2,809 2,479 1,954 1,431 1,252 1,133 1,214
---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
</TABLE>
<TABLE>
<CAPTION>
1989 1988
---------- ----------
$ in thousands/in thousands of short tons/
Year ended October 31,
COAL
<S> <C> <C>
Revenues $ 815,558 $ 783,719
Operating profit $ 51,007 $ 50,375
Produced coal sold
Steam coal 11,942 11,057
Metallurgical coal 4,640 3,968
---------- ----------
Total produced coal sold 16,582 15,025
Purchased coal sold 9,300 10,038
Total employees 1,435 1,232
---------- ----------
</TABLE>
*Amounts are immaterial.
22
<PAGE> 2
SELECTED FINANCIAL DATA
<TABLE>
<CAPTION>
1997 1996 1995 1994 1993
------------- ------------- ------------- ------------- -------------
In millions, except per share amounts
CONSOLIDATED OPERATING RESULTS
<S> <C> <C> <C> <C> <C>
Revenues $ 14,298.5 $ 11,015.2 $ 9,301.4 $ 8,485.3 $ 7,850.2
Earnings from continuing operations before taxes 255.3 413.2 362.2 303.3 242.2
Earnings from continuing operations, net 146.2 268.1 231.8 192.4 166.8
Earnings (loss) from discontinued operations, net -- -- -- -- --
Cumulative effect of change in accounting principle, net -- -- -- -- --
Net earnings 146.2 268.1 231.8 192.4 166.8
Earnings per share
Continuing operations 1.73 3.17 2.78 2.32 2.03
Discontinued operations -- -- -- -- --
Cumulative effect of change in accounting principle -- -- -- -- --
------------- ------------- ------------- ------------- -------------
Net earnings per share $ 1.73 $ 3.17 $ 2.78 $ 2.32 $ 2.03
Return on average shareholders' equity 8.7% 17.4% 17.6% 17.1% 17.4%
Cash dividends per common share $ .76 $ .68 $ .60 $ .52 $ .48
CONSOLIDATED FINANCIAL POSITION
Current assets $ 2,225.9 $ 1,796.8 $ 1,411.6 $ 1,258.4 $ 1,309.1
Current liabilities 1,990.7 1,645.5 1,238.6 1,021.3 930.9
------------- ------------- ------------- ------------- -------------
Working capital 235.2 151.3 173.0 237.1 378.2
Property, plant and equipment, net 1,938.8 1,677.7 1,435.8 1,274.4 1,100.9
Total assets 4,697.8 3,951.7 3,228.9 2,824.8 2,588.9
Capitalization
Long-term debt 300.5 3.0 2.9 24.4 59.6
Shareholders' equity 1,741.1 1,669.7 1,430.8 1,220.5 1,044.1
------------- ------------- ------------- ------------- -------------
Total capitalization $ 2,041.6 $ 1,672.7 $ 1,433.7 $ 1,244.9 $ 1,103.7
Percent of total capitalization
Long-term debt 14.7% .2% .2% 2.0% 5.4%
Shareholders' equity 85.3% 99.8% 99.8% 98.0% 94.6%
Shareholders' equity per common share $ 20.79 $ 19.93 $ 17.20 $ 14.79 $ 12.72
Common shares outstanding at October 31 83.7 83.8 83.2 82.5 82.1
OTHER DATA
New awards $ 12,122.1 $ 12,487.8 $ 10,257.1 $ 8,071.5 $ 8,000.9
Backlog at year end 14,370.0 15,757.4 14,724.9 14,021.9 14,753.5
Capital expenditures and acquisitions* 647.4 484.5 335.1 274.8 171.5
Cash provided by operating activities $ 328.6 $ 406.9 $ 366.4 $ 458.6 $ 188.7
</TABLE>
<TABLE>
<CAPTION>
1992 1991 1990 1989 1988
------------- ------------- ------------ ------------ ------------
In millions, except per share amounts
CONSOLIDATED OPERATING RESULTS
<S> <C> <C> <C> <C> <C>
Revenues $ 6,600.7 $ 6,572.0 $ 7,248.9 $ 6,127.2 $ 5,008.9
Earnings from continuing operations before taxes 215.4 228.4 153.6 135.6 62.0
Earnings from continuing operations, net 135.3 153.1 119.4 84.1 38.6
Earnings (loss) from discontinued operations, net (96.6) 11.0 35.2 28.6 21.6
Cumulative effect of change in accounting principle, net (32.9) -- -- -- --
Net earnings 5.8 164.1 154.6 112.7 60.2
Earnings per share
Continuing operations 1.65 1.87 1.47 1.04 .48
Discontinued operations (1.18) .14 .43 .36 .27
Cumulative effect of change in accounting principle (.40) -- -- -- --
------------- ------------- ------------ ------------ ------------
Net earnings per share $ .07 $ 2.01 $ 1.90 $ 1.40 $ .75
Return on average shareholders' equity .6% 20.2% 23.3% 21.5% 14.2%
Cash dividends per common share $ .40 $ .32 $ .24 $ .14 $ .02
CONSOLIDATED FINANCIAL POSITION
Current assets $ 1,138.6 $ 1,159.5 $ 1,222.8 $ 1,036.4 $ 1,001.0
Current liabilities 845.4 848.2 984.0 797.7 786.1
------------- ------------- ------------ ------------ ------------
Working capital 293.2 311.3 238.8 238.7 214.9
Property, plant and equipment, net 1,046.9 1,092.7 925.3 775.3 729.8
Total assets 2,365.5 2,421.4 2,475.8 2,154.3 2,075.7
Capitalization
Long-term debt 61.3 75.7 57.6 62.5 95.0
Shareholders' equity 880.8 900.6 741.3 589.9 467.1
------------- ------------- ------------ ------------ ------------
Total capitalization $ 942.1 $ 976.3 $ 798.9 $ 652.4 $ 562.1
Percent of total capitalization
Long-term debt 6.5% 7.8% 7.2% 9.6% 16.9%
Shareholders' equity 93.5% 92.2% 92.8% 90.4% 83.1%
Shareholders' equity per common share $ 10.81 $ 11.10 $ 9.22 $ 7.39 $ 5.91
Common shares outstanding at October 31 81.5 81.1 80.4 79.8 79.1
OTHER DATA
New awards $ 10,867.7 $ 8,531.6 $ 7,632.3 $ 7,135.3 $ 5,955.2
Backlog at year end 14,706.0 11,181.3 9,557.8 8,360.9 6,658.6
Capital expenditures and acquisitions* 272.7 106.5 126.4 130.4 77.4
Cash provided by operating activities $ 306.1 $ 219.0 $ 353.1 $ 265.1 $ 17.7
</TABLE>
*Excludes discontinued operations.
See Management's Discussion and Analysis on pages 24 to 28 and Notes to
Consolidated Financial Statements on pages 33 to 43 for information relating to
significant items affecting the results of operations.
23
<PAGE> 3
MANAGEMENT'S DISCUSSION AND ANALYSIS
[LOGO]
The following discussion and analysis is provided to increase understanding of,
and should be read in conjunction with, the consolidated financial statements
and accompanying notes.
RESULTS OF OPERATIONS
The company currently operates in two business segments: Engineering and
Construction and Coal. The Engineering and Construction segment provides design,
engineering, procurement, construction, maintenance and other diversified
services to clients in a broad range of industrial and geographic markets on a
worldwide basis. The Coal segment produces, processes and sells high-quality,
low-sulfur steam coal for the electric generating industry as well as industrial
customers, and metallurgical coal for the steel industry.
ENGINEERING AND CONSTRUCTION SEGMENT
Total 1997 new awards were $12.1 billion compared with $12.5 billion in 1996 and
$10.3 billion in 1995. The following table sets forth new awards for each of the
segment's business groups:
<TABLE>
<CAPTION>
1997 1996 1995
------- ------- -------
$ in millions/Year ended October 31,
<S> <C> <C> <C>
Process $ 6,090 $ 4,061 $ 3,859
50% 33% 38%
Industrial 4,057 6,182 4,313
34% 49% 42%
Power/Government 1,150 1,428 1,873
9% 11% 18%
Diversified Services 825 817 212
7% 7% 2%
------- ------- -------
Total new awards $12,122 $12,488 $10,257
100% 100% 100%
======= ======= =======
U.S. $ 5,443 $ 5,749 $ 4,495
45% 46% 44%
International 6,679 6,739 5,762
55% 54% 56%
------- ------- -------
Total new awards $12,122 $12,488 $10,257
100% 100% 100%
======= ======= =======
</TABLE>
New awards in 1997 were slightly lower compared with 1996, primarily
reflecting the increasingly competitive conditions in the global marketplace.
The large size and uncertain timing of complex, international projects can
create variability in the company's award pattern; consequently, future award
trends are difficult to predict with certainty. Furthermore, the volatility in
certain international markets could result in the delay of awards during fiscal
year 1998.
The growth in the Process Group's new awards in 1997 was due primarily
to the award of the $1.9 billion Yanpet project, a petrochemical project being
constructed in Saudi Arabia. The decrease in the Industrial Group's new awards
in 1997 was primarily in mining and metals, which had significant activity in
1996, including a $1 billion award for the procurement, construction and
management services of a copper and gold mine in Indonesia. Most awards in the
Power/Government Group in 1997 were for smaller projects located primarily in
the United States. New awards in this group in 1996 and 1995 included two
large-scale projects. In 1996, the company was selected to manage the
environmental cleanup of the Department of Energy's Hanford site, a former
plutonium production facility located in southeastern Washington state. The
contract is for an initial five-year term with potential contract extensions for
an additional five years. The work is being added to backlog as congressional
authority to expend the funds is received. The initial authorized phase of $1
billion was recognized as a new award in 1996, representing the estimated total
value of work to be performed for the entire project during fiscal year 1997. In
the fourth quarter of 1997, based on the experience gained during 1997 regarding
the Department of Energy's fee determination procedures for the Hanford project,
the company recognized a new award of $220 million representing only its
estimated proportionate share of the total work to be performed at the Hanford
site in 1998. The Power/Government Group's new awards in 1995 included over $1
billion relating to a power project being constructed in Paiton, Indonesia.
Diversified Services new awards in 1997 were comparable with 1996 and were
comprised primarily of additional facility management service contracts for IBM
at various facilities located throughout the United States. Because of the
nature of the services performed by Diversified Services, the vast majority of
this group's activities are not includable in backlog.
24
<PAGE> 4
Backlog at October 31, 1997, 1996 and 1995 was $14.4 billion, $15.8
billion and $14.7 billion, respectively. (See page 22 in this annual report for
information relating to backlog by industry group.) The increase in the Process
Group's backlog at October 31, 1997 compared with October 31, 1996, was due
primarily to the Yanpet project in Saudi Arabia. The decrease in the Industrial
Group's backlog at October 31, 1997 compared with October 31, 1996, was due
primarily to lower awards activity in mining and metals in 1997. Backlog in the
Power/Government Group declined in 1997 compared with 1996 due primarily to the
work performed on the Fernald environmental cleanup project and the Paiton power
project and the change in new award reporting for the Hanford project discussed
above. The increase in backlog from projects located outside the United States
at October 31, 1997, was primarily due to the Yanpet project. Approximately 28
percent of the company's backlog is in the Asia Pacific region, including
Australia. Due to the nature of the projects included in backlog, the company
does not believe it will experience significant disruption in project execution
related to the recent turmoil in Asian financial markets. Although backlog
reflects business which is considered to be firm, cancellations or scope
adjustments may occur. Backlog has been adjusted to reflect known project
cancellations, deferrals, and revised project scope and cost, both upward and
downward. The net reduction in backlog from project adjustments and
cancellations for the year ended October 31, 1997 was $.7 billion, compared with
$1.6 billion and $1.2 billion for the years ended October 31, 1996 and 1995,
respectively.
Engineering and Construction revenues increased to $13.2 billion in 1997
compared with $10.1 billion in 1996 and $8.5 billion in 1995, due primarily to
increases in the volume of work performed. U.S. revenues increased in 1997,
reflecting both continued growth within the Diversified Services Group and a
healthy U.S. economy. Export revenues increased in 1997 compared with 1996 and
1995 primarily as the result of substantial engineering work performed in the
U.S. for the Paiton power project in Indonesia. Engineering and Construction
operating profits decreased 62 percent to $122 million in 1997, compared with
$320 million in 1996 and $286 million in 1995, due primarily to the items
described in the following four paragraphs. Operating margins for the year ended
October 31, 1997 were adversely impacted by a variety of factors, including
lower incentive fees earned, delays in the full release of certain projects, a
reduction in recoveries for United States Government work, competitive pricing
primarily in the Industrial and Power/Government Groups and the items referred
to below.
Provisions of $21.0 million were recognized in the first quarter for
cost overruns on two fixed price power projects, including a power project
located outside the United States. The loss in the first quarter on this project
reflected additional costs then identified to be incurred on the first phase of
the project arising primarily from bad weather, lack of timely site access,
unexpected design changes and low labor productivity. The loss on the other
project, which is located in the United States, was due primarily to startup
problems, craft employee turnover and operation of the plant control system. The
company also recognized in the first quarter a credit totaling $25.0 million
related to certain actuarially determined insurance accruals. The insurance
accrual adjustment was due primarily to improvement in loss experience resulting
from the company's safety program, resulting in an excess accrual position.
Provisions of $91.4 million for estimated losses on certain contracts
were recognized in the second quarter of 1997. Approximately 75 percent of the
contract provisions pertained to cost overruns on the power project located
outside the United States. During the second quarter, the company experienced
additional difficulties on this project including significant ongoing design
changes, long delays in approval of drawings and vendors and resulting low
productivity in the field. By the end of the second quarter, these difficulties
were substantially resolved as to the first phase of the project and rendered
more predictable as to the second phase of the project. Accordingly, in the
second quarter the company recorded a provision to recognize the estimated total
amount of the loss under the contract. No additional provision related to this
project was recorded subsequent to the second quarter. Also included in the
second quarter provisions were certain other projects identified to be loss
contracts. None of these provisions individually exceeded $5 million. No
material additional provisions related to these projects were recorded
subsequent to the second quarter.
Additionally, during the second quarter of 1997, the company recorded
$26.8 million in provisions for the impairment, abandonment or sale of certain
project-related investments and joint ventures, and doubtful accounts
receivable, none of which individually exceeded $5 million. These included the
anticipated sale of the company's interest in a joint venture within the pulp
and paper industry, a write down of an equity investment obtained in exchange
for services rendered to an environmental technology company and certain other
project joint ventures where it was determined in the second quarter that the
company's investment was not expected to be realized due to poor market
conditions or cancellation of the project concerned.
25
<PAGE> 5
Results for the year ended October 31, 1997 include charges of $19.9
million, $1.0 million and $4.5 million in the second, third and fourth quarters,
respectively, related to implementation of certain cost reduction initiatives.
These charges consist of personnel-related costs and lease costs for excess
facilities. As of October 31, 1997, approximately $10.1 million of these costs
had been incurred. To date, the company has initiated action to downsize,
consolidate or close 17 of its more than 80 offices and has consolidated certain
industry operating companies. Upon full implementation of the cost reduction
initiatives, which is expected in 1998, the company believes that annualized
savings of $100 million can be achieved. The company anticipates that the cash
flow impact of the costs to implement these savings initiatives will not have a
material impact on current or future periods.
The majority of the company's Engineering and Construction contracts
provide for reimbursement of costs plus a fixed or percentage fee. In the highly
competitive markets served by this segment, there is an increasing trend for
cost-reimbursable contracts with incentive-fee arrangements and fixed or unit
price contracts. In certain instances, the company has provided guaranteed
completion dates and/or achievement of other performance criteria. Failure to
meet schedule or performance guarantees can result in non-reimbursable costs
which could exceed project profit margins. The company continues to focus on
improving operating margins by enhancing selectivity in the projects it pursues,
increasing the level of incentive fees earned and lowering the cost of
delivering services through its global network of offices, allowing greater use
of high-value engineering centers located in lower-cost areas of the world.
In December 1996, TRS Staffing Solutions, Inc., the company's temporary
personnel services subsidiary, acquired the ConSol Group; in May 1997, American
Equipment Company, Inc. (American Equipment), the company's equipment sales and
rental subsidiary, acquired the SMA Companies; and, in June 1997, American
Equipment acquired J.W. Burress, Inc. These businesses were purchased for a
total of $139 million.
In addition to the acquisitions noted above, during 1997 the company
finalized other smaller acquisitions in selected niche markets. All acquisitions
have been accounted for under the purchase method of accounting and their
results of operations have been included in the company's consolidated financial
statements from the respective acquisition dates. If these acquisitions had been
made at the beginning of 1996, results of operations would not have differed
materially from actual results.
In August 1997, the company completed the sale of ACQUION, a global
provider of supply chain management services, for $12 million in cash, resulting
in a pretax gain of $7 million.
The company is currently conducting an analysis of strategic
alternatives for certain of its Engineering and Construction business units
including the company's equipment sales and rental unit, American Equipment.
Alternatives include the possible sale or restructuring. In the event of any
sale or restructuring, the company intends to apply the after-tax proceeds to
the repurchase of its stock, if market conditions are appropriate.
COAL SEGMENT
Revenues and operating profit from Coal operations in 1997 were $1,081 million
and $155 million, respectively, compared with $961 million and $135 million in
1996. Revenues and operating profit in 1995 were $850 million and $111 million,
respectively.
Revenues increased in 1997 due primarily to increased sales volume of
both metallurgical and steam coal, partially offset by lower steam coal prices.
The increase in metallurgical coal revenues is due primarily to an increased
market share of sales to steel producers. Steam coal market prices declined
approximately 4 percent in 1997 as overall demand was down due to both a mild
winter and summer in 1997. Despite lower steam coal prices, steam coal revenues
increased due primarily to the addition of a number of new electric utility
customers. Gross profit and operating profit both increased 15 percent in 1997
compared with 1996, due primarily to the increased sales volume of both
metallurgical and steam coal and lower costs of producing both steam and
metallurgical coal.
Revenues increased in 1996 compared with 1995 due primarily to increased
sales volume of both metallurgical and steam coal. Metallurgical coal revenues
increased due primarily to the continued strong demand by steel producers and
the capturing of a larger share of the metallurgical coal market. Steam coal
sales benefited from the severe winter in 1996 as electric utilities replenished
their depleted inventory levels. Gross profit and operating profit increased 24
percent and 21 percent, respectively, in 1996 compared with 1995, due primarily
to the increased sales volume and lower costs of both metallurgical and steam
coal combined with improved pricing of metallurgical coal.
OTHER
The company had net interest expense for the year ended October 31, 1997
compared with net interest income for the same periods of 1996 and 1995 due
primarily to $300 million in new long-term debt
26
<PAGE> 6
issued in March 1997, an increase in other interest bearing liabilities and
lower interest bearing assets. Net interest income for the year ended October
31, 1996 decreased $7.9 million compared with the same period of 1995 due
primarily to both lower interest earning assets and higher interest bearing
liabilities.
Corporate administrative and general expense for the year ended October
31, 1997 decreased compared with the same period of 1996 due primarily to lower
accruals for stock-related and performance-based compensation plans and lower
corporate overhead. Corporate administrative and general expense in 1996 was
level with 1995 as lower corporate overhead was offset by higher
performance-driven compensation plan expense. The company accrues for certain
long-term incentive awards whose ultimate cost is dependent on attainment of
various performance targets set by the Organization and Compensation Committee
(the "Committee") of the Board of Directors. Under one such program the
performance target expired, without amendment or extension by the Committee, on
December 31, 1997. Accordingly, the company will record a first quarter 1998
credit of approximately $10 million.
The effective tax rate for the year ended October 31, 1997 was
materially impacted by foreign-based project losses, other project-related
investment losses and certain implementation costs for cost reduction
initiatives incurred during the year which are not expected to receive full tax
benefit. If these losses are excluded for tax rate determination purposes, there
is no significant difference between the effective tax rate and the statutory
rate for the year ended October 31, 1997.
The company initiated a review of its software systems in early 1996 in
view of the fact that certain systems will not recognize dates after the year
1999, which could cause those systems to produce invalid results. This is
commonly referred to as "the Year 2000 problem." The company has substantially
completed the assessment phase of all major systems and, in some cases, has made
the required changes and is in the process of completing the testing phase.
Based upon the results of the work done to date, the company believes that the
remaining work will be completed in a timely manner and that the overall cost of
such work will not be material. The company expenses such costs when incurred.
There can be no assurance, however, that further work will not identify issues
which could change the company's present assessment of the cost of addressing
this issue.
DISCONTINUED OPERATIONS
In 1994, the company completed the sale of its Lead business for consideration
consisting of both cash and deferred payments. Proceeds included $52 million
cash on the date of the closing and deferred amounts to be paid in installments
over periods ranging from five to eight years. During 1997, the company
negotiated a prepayment of the remaining outstanding amounts, receiving $60
million in October 1997. The $60 million was in addition to approximately $36
million for the principal and interest on deferred amounts received since the
date of sale. The amounts received slightly exceeded the recorded discounted
value of the receivables.
The company has responsibility for certain environmental liabilities
arising out of certain zinc mining and smelting operations formerly conducted by
St. Joe Minerals Corporation ("St. Joe"), but only to the extent that such
liabilities are not covered by St. Joe's comprehensive general liability
insurance.
FINANCIAL POSITION AND LIQUIDITY
The decrease in cash provided by operating activities in 1997, compared with
1996 and 1995, is due primarily to lower earnings and increases in operating
assets and liabilities (excluding the effects of businesses acquired), related
primarily to an increase in the volume of work performed. During 1997, increases
in receivables and contract work in progress were only partially offset by
increases in certain project-related short-term liabilities, primarily accounts
payable and advance billings on contracts. Changes in operating assets and
liabilities vary from year to year and are affected by the mix, stage of
completion and commercial terms of engineering and construction projects. The
increase in cash utilized by investing activities in 1997, compared with 1996
and 1995, is primarily attributable to increased capital expenditures and
acquisitions by both the Engineering and Construction and Coal segments,
partially offset by proceeds from the sale and maturity of marketable
securities, sales of property, plant and equipment and collection of notes
receivable. Engineering and Construction capital expenditures and acquisitions
were primarily for American Equipment and directed toward expanding the
machinery and equipment rental business. Capital expenditures and acquisitions
by the Coal operations have been directed primarily toward developing existing
reserves and acquiring additional coal reserves. Working capital acquired
through both Engineering and Construction and Coal acquisitions totaled $50
million in 1997, $28 million in 1996 and $1 million in 1995. Monies received
from notes receivable related to the ongoing collection of deferred amounts
associated with the company's 1994 sale of its Lead business, including the
prepayment of all remaining amounts
27
<PAGE> 7
in October 1997. Cash provided by financing activities resulted primarily from
the sale of debt securities discussed below and increased short-term borrowings,
partially offset by dividend payments and the repurchase of company shares.
The long-term debt to capitalization ratio at October 31, 1997 was 14.7
percent compared with less than 1.0 percent at October 31, 1996.
The company has on hand and access to sufficient sources of funds to
meet its anticipated operating, expansion and capital needs. Significant short-
and long-term lines of credit are maintained with banks which, along with cash
on hand and marketable securities, provide adequate operating liquidity.
Liquidity is also provided by the company's commercial paper program under which
there was $62 million outstanding at October 31, 1997 compared with $30 million
at October 31, 1996.
During December 1996, the Company filed a shelf registration statement
with the Securities and Exchange Commission for the sale of up to $400 million
of debt securities. In March 1997, $300 million of 6.95 percent senior notes due
March 1, 2007 were issued under this filing. Proceeds were used primarily to
fund operating working capital and capital expenditures. In addition, the
company utilized proceeds from the debt offering to continue its share
repurchase program initiated in February 1997. During fiscal 1997, the company
purchased 619,000 shares of its common stock for a total of $34 million. The
company intends to continue its ongoing share repurchase program and in December
1997, the company's Board of Directors increased the existing repurchase
authorization to 10 milion shares.
Cash dividends increased to $63.8 million ($.76 per share) in 1997 from
$56.8 million ($.68 per share) in 1996 and $49.7 million ($.60 per share) in
1995. The quarterly dividend was increased in the first quarter of 1998 to the
current level of $.20 per share.
Although the company is affected by inflation and the cyclical nature of
the industry, its Engineering and Construction operations are generally
protected by the ability to recover cost increases in most contracts. Coal
operations produce a commodity which is internationally traded at prices
established by market factors outside the control of the company. However,
commodity prices generally tend over the long term to correlate with
inflationary trends, and the company's substantial coal reserves provide a hedge
against the long-term effects of inflation. Although the company has taken
actions to reduce its dependence on external economic conditions, management is
unable to predict with certainty the amount and mix of future business.
FINANCIAL INSTRUMENTS
The company's investment securities and substantially all of its debt
instruments carry fixed rates of interest over their respective maturity terms.
The company does not currently use derivatives, such as swaps, to alter the
interest characteristics of its investment securities or its debt instruments.
The company's exposure to interest rate risk on its $300 million senior notes,
due in 2007, is not material given the company's strong balance sheet and
creditworthiness which provides the ability to refinance.
The company's utilization of derivative financial instruments is
substantially limited to the use of forward exchange contracts to hedge foreign
currency transactions entered into in the ordinary course of business and not to
engage in currency speculation. At October 31, 1997 and 1996, the company had
forward foreign exchange contracts of less than one year duration, to exchange
principally Japanese yen, Canadian dollars, Australian dollars and French francs
for U.S. dollars. In addition, the company has a forward foreign currency
contract to exchange U.S. dollars for British pounds sterling to hedge annual
lease commitments which expire in 1999. The total gross notional amount of these
contracts at October 31, 1997 and 1996 was $78 million and $68 million,
respectively. Forward contracts to purchase foreign currency represented $74
million and $63 million and forward contracts to sell foreign currency
represented $4 million and $5 million, at October 31, 1997 and 1996,
respectively.
NEW ACCOUNTING PRONOUNCEMENTS
In June 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 131, "Disclosures about Segments of an
Enterprise and Related Information" (SFAS No. 131). SFAS No. 131 establishes new
standards for reporting information about operating segments in interim and
annual financial statements. This statement is effective for the company's
fiscal year 1999.
In February 1997, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 128, "Earnings Per Share" (SFAS
No. 128). SFAS No. 128 redefines the standards for computing earnings per share
and is effective for the company's fiscal year 1998. The company believes
adoption of the new standards will not have a material impact on its earnings
per share calculations.
28
<PAGE> 8
CONSOLIDATED BALANCE SHEET
<TABLE>
<CAPTION>
1997 1996
----------- -----------
<S> <C> <C>
$ in thousands/At October 31,
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 299,324 $ 246,964
Marketable securities 10,089 69,378
Accounts and notes receivable 930,104 742,547
Contract work in progress 691,395 561,490
Inventories 175,448 73,927
Deferred taxes 58,039 50,157
Other current assets 61,487 52,360
----------- -----------
Total current assets 2,225,886 1,796,823
----------- -----------
PROPERTY, PLANT AND EQUIPMENT
Land 70,571 63,969
Buildings and improvements 341,260 329,358
Machinery and equipment 1,761,275 1,424,999
Mining properties and mineral rights 729,458 644,415
Construction in progress 37,541 36,133
----------- -----------
2,940,105 2,498,874
Less accumulated depreciation, depletion and amortization 1,001,315 821,212
----------- -----------
Net property, plant and equipment 1,938,790 1,677,662
----------- -----------
OTHER ASSETS
Goodwill, net of accumulated amortization
of $28,399 and $18,589, respectively 158,399 84,772
Investments 96,549 108,107
Other 278,216 284,362
----------- -----------
Total other assets 533,164 477,241
----------- -----------
$ 4,697,840 $ 3,951,726
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts and notes payable $ 878,187 $ 704,186
Commercial paper 61,886 29,916
Advance billings on contracts 525,518 445,807
Accrued salaries, wages and benefit plan liabilities 303,490 290,426
Other accrued liabilities 221,487 175,026
Current portion of long-term debt 116 207
----------- -----------
Total current liabilities 1,990,684 1,645,568
----------- -----------
LONG-TERM DEBT DUE AFTER ONE YEAR 300,508 2,967
NONCURRENT LIABILITIES
Deferred taxes 66,739 42,632
Other 598,859 590,833
----------- -----------
Total noncurrent liabilities 665,598 633,465
----------- -----------
CONTINGENCIES AND COMMITMENTS
SHAREHOLDERS' EQUITY
Capital stock
Preferred -- authorized 20,000,000 shares without par value, none issued
Common -- authorized 150,000,000 shares of $.625 par value; issued and
outstanding in 1997 -- 83,748,111 shares and in 1996 -- 83,791,197 shares 52,343 52,369
Additional capital 569,356 573,037
Retained earnings 1,159,996 1,077,559
Unamortized executive stock plan expense (33,441) (32,538)
Cumulative translation adjustment (7,204) (701)
----------- -----------
Total shareholders' equity 1,741,050 1,669,726
----------- -----------
$ 4,697,840 $ 3,951,726
=========== ===========
</TABLE>
See Notes to Consolidated Financial Statements.
29
<PAGE> 9
CONSOLIDATED STATEMENT OF EARNINGS
<TABLE>
<CAPTION>
1997 1996 1995
------------ ------------ ------------
In thousands, except per share amounts/
Year ended October 31,
<S> <C> <C> <C>
REVENUES
Engineering and construction services $ 13,217,515 $ 10,054,365 $ 8,451,626
Coal 1,081,026 960,827 849,758
------------ ------------ ------------
Total revenues 14,298,541 11,015,192 9,301,384
------------ ------------ ------------
COST OF REVENUES
Engineering and construction services 13,096,310 9,739,148 8,171,351
Coal 926,260 826,301 738,725
------------ ------------ ------------
Total cost of revenues 14,022,570 10,565,449 8,910,076
OTHER (INCOME) AND EXPENSES
Corporate administrative and general expense 13,230 48,120 48,636
Interest expense 30,758 16,051 13,385
Interest income (23,286) (27,646) (32,927)
------------ ------------ ------------
Total cost and expenses 14,043,272 10,601,974 8,939,170
------------ ------------ ------------
EARNINGS BEFORE TAXES 255,269 413,218 362,214
INCOME TAX EXPENSE 109,082 145,134 130,446
------------ ------------ ------------
NET EARNINGS $ 146,187 $ 268,084 $ 231,768
============ ============ ============
EARNINGS PER SHARE $ 1.73 $ 3.17 $ 2.78
============ ============ ============
SHARES USED TO CALCULATE EARNINGS PER SHARE 84,500 84,566 83,428
============ ============ ============
</TABLE>
See Notes to Consolidated Financial Statements.
30
<PAGE> 10
CONSOLIDATED STATEMENT OF CASH FLOWS
<TABLE>
<CAPTION>
1997 1996 1995
--------- --------- ---------
<S> <C> <C> <C>
In thousands/Year ended October 31,
CASH FLOWS FROM OPERATING ACTIVITIES
Net earnings $ 146,187 $ 268,084 $ 231,768
Adjustments to reconcile net earnings to cash provided
by operating activities:
Depreciation, depletion and amortization 248,353 194,129 146,957
Deferred taxes 25,428 12,631 1,709
Provisions for impairment/abandonment of joint
ventures and investments 22,962 -- --
Gain on sale of business (7,222) -- --
Changes in operating assets and liabilities, excluding
effects of businesses acquired (67,224) (60,353) 9,408
Other, net (39,860) (7,632) (23,491)
--------- --------- ---------
Cash provided by operating activities 328,624 406,859 366,351
--------- --------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures (466,202) (392,436) (318,942)
E&C businesses acquired (141,718) (87,085) (16,230)
Coal companies acquired (39,482) (5,010) --
Purchase of marketable securities -- (67,069) (132,934)
Proceeds from sales and maturities of marketable securities 59,289 134,496 115,553
Investments, net (9,275) 3,991 (16,667)
Proceeds from sale of property, plant and equipment 50,996 29,486 17,406
Collection of notes receivable 77,496 11,072 6,978
Contributions to deferred compensation trust (43,026) -- (21,513)
Proceeds from sale of business 11,992 -- --
Other, net (12,041) (23,771) (14,686)
--------- --------- ---------
Cash utilized by investing activities (511,971) (396,326) (381,035)
--------- --------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES
Cash dividends paid (63,750) (56,830) (49,712)
Payments on long-term debt (8,378) (42,456) (35,604)
Increase in short-term borrowings, net 21,692 26,109 9,980
Increase in long-term borrowings 304,097 -- --
Stock options exercised 16,007 17,351 9,757
Purchases of common stock (33,924) -- --
Other, net (37) (677) (1,271)
--------- --------- ---------
Cash provided (utilized) by financing activities 235,707 (56,503) (66,850)
--------- --------- ---------
Increase (decrease) in cash and cash equivalents 52,360 (45,970) (81,534)
Cash and cash equivalents at beginning of year 246,964 292,934 374,468
--------- --------- ---------
Cash and cash equivalents at end of year $ 299,324 $ 246,964 $ 292,934
========= ========= =========
</TABLE>
See Notes to Consolidated Financial Statements.
31
<PAGE> 11
CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY
<TABLE>
<CAPTION>
Common Stock Unamortized Cumulative
------------------ Additional Retained Executive Stock Translation
In thousands, except per share amounts Share Amounts Capital Earnings Plan Expense Adjustment Total
<S> <C> <C> <C> <C> <C> <C> <C>
BALANCE AT OCTOBER 31, 1994 82,508 $51,567 $498,804 $684,249 $(14,472) $ 308 $1,220,456
- -------------------------------------------------------------------------------------------------------------------------------
Net earnings 231,768 231,768
Cash dividends ($.60 per share) (49,712) (49,712)
Exercise of stock options, net 264 165 9,592 9,757
Stock option tax benefit 2,460 2,460
Amortization of executive
stock plan expense 3,684 3,684
Issuance of restricted stock, net 393 246 20,320 (16,077) 4,489
Tax benefit from reduction of
valuation allowance for
deferred tax assets 7,327 7,327
Translation adjustment (net of
deferred taxes of $374) 585 585
---------------------------------------------------------------------------------------
BALANCE AT OCTOBER 31, 1995 83,165 51,978 538,503 866,305 (26,865) 893 1,430,814
---------------------------------------------------------------------------------------
Net earnings 268,084 268,084
Cash dividends ($.68 per share) (56,830) (56,830)
Exercise of stock options, net 466 291 17,060 17,351
Stock option tax benefit 3,977 3,977
Amortization of executive
stock plan expense 5,723 5,723
Issuance of restricted stock, net 160 100 11,084 (11,396) (212)
Tax benefit from reduction of
valuation allowance for
deferred tax assets 2,413 2,413
Translation adjustment (net of
deferred taxes of $1,019) (1,594) (1,594)
---------------------------------------------------------------------------------------
BALANCE AT OCTOBER 31, 1996 83,791 52,369 573,037 1,077,559 (32,538) (701) 1,669,726
---------------------------------------------------------------------------------------
Net earnings 146,187 146,187
Cash dividends ($.76 per share) (63,750) (63,750)
Exercise of stock options, net 415 260 15,747 16,007
Stock option tax benefit 3,528 3,528
Amortization of executive
stock plan expense 8,183 8,183
Issuance of restricted stock, net 161 101 9,006 (9,086) 21
Purchases of common stock (619) (387) (33,537) (33,924)
Tax benefit from reduction of
valuation allowance for
deferred tax assets 1,575 1,575
Translation adjustment (net of
deferred taxes of $4,333) (6,503) (6,503)
---------------------------------------------------------------------------------------
BALANCE AT OCTOBER 31, 1997 83,748 $52,343 $569,356 $1,159,996 $(33,441) $(7,204) $1,741,050
---------------------------------------------------------------------------------------
</TABLE>
See Notes to Consolidated Financial Statements.
32
<PAGE> 12
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
[LOGO]
MAJOR ACCOUNTING POLICIES
PRINCIPLES OF CONSOLIDATION
The financial statements include the accounts of the company and its
subsidiaries. The equity method of accounting is used for investment ownership
ranging from 20 percent to 50 percent. Investment ownership of less than 20
percent is accounted for on the cost method. All significant intercompany
transactions of consolidated subsidiaries are eliminated. Certain 1996 and 1995
amounts have been reclassified to conform with the 1997 presentation.
USE OF ESTIMATES
The preparation of the financial statements of the company requires management
to make estimates and assumptions that affect reported amounts. These estimates
are based on information available as of the date of the financial statements.
Therefore, actual results could differ from those estimates.
ENGINEERING AND CONSTRUCTION CONTRACTS
The company recognizes engineering and construction contract revenues using the
percentage-of-completion method, based primarily on contract costs incurred to
date compared with total estimated contract costs. Customer-furnished materials,
labor and equipment, and in certain cases subcontractor materials, labor and
equipment, are included in revenues and cost of revenues when management
believes that the company is responsible for the ultimate acceptability of the
project. Contracts are segmented between types of services, such as engineering
and construction, and accordingly, gross margin related to each activity is
recognized as those separate services are rendered. Changes to total estimated
contract costs or losses, if any, are recognized in the period in which they are
determined. Revenues recognized in excess of amounts billed are classified as
current assets under contract work in progress. Amounts billed to clients in
excess of revenues recognized to date are classified as current liabilities
under advance billings on contracts. The company anticipates that substantially
all incurred costs associated with contract work in progress at October 31, 1997
will be billed and collected in 1998.
DEPRECIATION, DEPLETION AND AMORTIZATION
Additions to property, plant and equipment are recorded at cost. Assets other
than mining properties and mineral rights are depreciated principally using the
straight-line method over the following estimated useful lives: buildings and
improvements -- 3 to 50 years and machinery and equipment -- 2 to 30 years.
Mining properties and mineral rights are depleted on the units-of-production
method. Leasehold improvements are amortized over the lives of the respective
leases. Goodwill is amortized on the straight-line method over periods not
longer than 40 years.
EXPLORATION, DEVELOPMENT AND RECLAMATION
Coal exploration costs are expensed as incurred. Development and acquisition
costs of coal properties, when significant, are capitalized in mining properties
and depleted. The company accrues for post-mining reclamation costs as coal is
mined. Reclamation of disturbed surface acreage is performed as a normal part of
the mining process.
INCOME TAXES
Deferred tax assets and liabilities are recognized for the expected future tax
consequences of events that have been recognized in the company's financial
statements or tax returns.
EARNINGS PER SHARE
Earnings per share is based on the weighted average number of common shares and,
when appropriate, common equivalent shares outstanding in each period. Common
equivalent shares, primarily stock options, are included when the effect of
exercise would be dilutive.
33
<PAGE> 13
In February 1997, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 128, "Earnings Per Share" (SFAS
No. 128). SFAS No. 128 redefines the standards for computing earnings per share
and is effective for the company's fiscal year 1998. The company believes
adoption of the new standards will not have a material impact on its earnings
per share calculations.
MARKETABLE SECURITIES
All investment securities are considered to be available-for-sale and carried at
fair value. Management determines classification at the time of purchase and
reevaluates its appropriateness at each balance sheet date. The company's
investments primarily include short-term, highly liquid investment grade debt
securities. As of October 31, 1997 and 1996 there were no material gross
unrealized gains or losses as the carrying value of the security portfolio
approximated fair value. Gross realized gains and losses on sales of securities
for the years ended October 31, 1997 and 1996 were also not material. The cost
of securities sold is based on the specific identification method. As of October
31, 1997 the total marketable securities portfolio matures within one year.
INVENTORIES
Inventories are stated at the lower of cost or market using the average cost
method. Inventories comprise:
<TABLE>
<CAPTION>
1997 1996
--------- --------
$ in thousands/At October 31,
<S> <C> <C>
Coal $ 54,419 $28,809
Equipment for sale/rental 74,574 19,477
Supplies and other 46,455 25,641
---------------------
$175,448 $73,927
=====================
</TABLE>
The increase in equipment for sale/rental inventories is due to the acquisition
of two equipment sales and rental companies during 1997.
FOREIGN CURRENCY
The company's utilization of derivative financial instruments is substantially
limited to the use of forward exchange contracts to hedge foreign currency
transactions entered into in the ordinary course of business and not to engage
in currency speculation. The company's forward exchange contracts do not subject
the company to risk from exchange rate movements because gains and losses on
such contracts offset losses and gains, respectively, on the assets, liabilities
or transactions being hedged. Accordingly, the unrealized gains and losses are
deferred and included in the measurement of the related foreign currency
transaction. At October 31, 1997, the company had approximately $78 million of
foreign exchange contracts outstanding relating to lease commitments and
contract obligations. The forward exchange contracts generally require the
company to exchange U.S. dollars for foreign currencies at maturity, at rates
agreed to at inception of the contracts. If the counterparties to the exchange
contracts (AA rated banks) do not fulfill their obligations to deliver the
contracted currencies, the company could be at risk for any currency related
fluctuations. The amount of any gain or loss on these contracts in 1997 and 1996
was immaterial. The contracts are of varying duration, none of which extend
beyond December 1, 1999. The company limits exposure to foreign currency
fluctuations in most of its engineering and construction contracts through
provisions that require client payments in U.S. dollars or other currencies
corresponding to the currency in which costs are incurred. As a result, the
company generally does not need to hedge foreign currency cash flows for
contract work performed. The functional currency of all significant foreign
operations is the local currency.
CONCENTRATIONS OF CREDIT RISK
The majority of accounts receivable and all contract work in progress are from
engineering and construction clients in various industries and locations
throughout the world. Most contracts require payments as the projects progress
or in certain cases advance payments. The company generally does not require
collateral, but in most cases can place liens against the property, plant or
equipment constructed or terminate the contract if a default occurs. Accounts
receivable from customers of the company's Coal operations are primarily
concentrated in the steel and utility industries. The company maintains adequate
reserves for potential credit losses and such losses have been minimal and
within management's estimates.
STOCK PLANS
The company accounts for stock-based compensation using the intrinsic value
method prescribed by Accounting Principles Board (APB) Opinion No. 25,
"Accounting for Stock Issued to Employees," and related Interpretations.
Accordingly, compensation cost for stock options is measured as the excess, if
any, of the quoted market price of the company's stock at the date of the grant
over the amount an
34
<PAGE> 14
employee must pay to acquire the stock. Compensation cost for stock appreciation
rights and performance equity units is recorded based on the quoted market price
of the company's stock at the end of the period.
CONSOLIDATED STATEMENT OF CASH FLOWS
Securities with maturities of 90 days or less at the date of purchase are
classified as cash equivalents. Securities with maturities beyond 90 days are
classified as marketable securities and are carried at fair market value. The
changes in operating assets and liabilities as shown in the Consolidated
Statement of Cash Flows comprise:
<TABLE>
<CAPTION>
1997 1996 1995
--------- -------- ----------
$ in thousands/Year ended October 31,
<S> <C> <C> <C>
(Increase) decrease in:
Accounts and notes receivable $ (125,954) $(78,632) $(141,505)
Contract work in progress (130,257) (176,137) (52,488)
Inventories (40,303) (8,743) (10,581)
Other current assets (17,028) (18,465) 6,292
Increase in:
Accounts payable 130,992 167,350 35,334
Advance billings on contracts 79,510 43,382 172,062
Accrued liabilities 35,816 10,892 294
---------- -------- --------
(Increase) decrease in operating
assets and liabilities $ (67,224) $(60,353) $ 9,408
========== ======== ========
Cash paid during the year for:
Interest expense $ 25,491 $ 11,832 $ 7,672
Income tax payments, net $ 75,967 $120,570 $121,508
</TABLE>
ACQUISITIONS AND DISPOSITION
During the last three years, the company completed certain business acquisitions
in both the Engineering and Construction and Coal segments. The Engineering and
Construction acquisitions were concentrated primarily within the Diversified
Services Group.
The following summarizes major Engineering and Construction
acquisitions:
1997:
- - ConSol Group, a privately held U.S. company headquartered in New Hampshire,
that provides staffing personnel in the fields of information technology and
allied health.
- - J.W. Burress, Inc., a privately held U.S. company headquartered in Virginia,
that provides product support services and sells, rents and services new and
used construction and industrial machinery.
- - SMA Companies, privately held U.S. companies headquartered in California and
Georgia. These companies sell, rent and service heavy construction and
industrial equipment and provide proprietary software to other equipment
distributors throughout the U.S.
These businesses and other smaller acquisitions were purchased for a
total of $142 million. The fair value of assets acquired, including working
capital of $42 million and goodwill of $67 million, was $196 million, and
liabilities assumed totaled $54 million.
1996:
- - Groundwater Technology, Inc. ("GTI"), a publicly traded company headquartered
in Massachusetts, that provides detailed, scientific environmental assessment
and remediation programs, as well as other environmental support services.
Under the terms of the transaction, the company consummated a merger between
one of its subsidiaries, Fluor Daniel Environmental Services, Inc., and GTI
wherein the company acquired an approximate 55 percent interest in the newly
named company, Fluor Daniel GTI, Inc.
- - S&R Equipment Company, Inc., a privately held U.S. company based in Ohio,
that specializes in high-lift equipment rentals.
- - Marshall Contractors, Inc., a privately held U.S. company based in Rhode
Island, that provides specialized construction services to the
microelectronics, pharmaceuticals, biotechnology, foods and related
industries.
These businesses and other smaller acquisitions were purchased for a
total of $87 million. The fair value of assets acquired, including working
capital of $26 million and goodwill of $50 million, was $329 million, and
liabilities assumed totaled $242 million.
1995:
- - Management Resources Group, plc, a privately held company headquartered in
London, England, that provides permanent and temporary placement services for
accounting, information technology and office personnel.
35
<PAGE> 15
- - Anderson DeBartolo Pan, Inc., a privately held U.S. company based in Arizona,
that provides professional services in engineering, architectural and
construction management to the microelectronics market and the health care,
hospitality and sports facilities industries.
- - A majority interest in Prosynchem S.A., a privately held company
headquartered in Gliwice, Poland, that provides engineering and construction
services to clients in the petroleum, petrochemicals, chemicals and
environmental industries in Poland and other Eastern European countries.
These businesses and other smaller acquisitions were purchased for a
total of $16 million. The fair value of assets acquired, including working
capital of $1 million and goodwill of $16 million, was $30 million, and
liabilities assumed totaled $14 million.
Massey Coal Company ("Massey") purchased four coal mining companies
during 1995 through 1997. The aggregate purchase price was $44 million and
included the fair value of assets acquired, consisting of $79 million of
property, plant and equipment, and mining rights, $14 million of working capital
and other assets, net of other liabilities assumed of $49 million. These
acquisitions, along with capital expenditures, have been directed primarily
towards acquiring additional coal reserves.
All of the above acquisitions have been accounted for under the purchase
method of accounting and their results of operations have been included in the
company's consolidated financial statements from the respective acquisition
dates. If these acquisitions had been made at the beginning of 1997, 1996 or
1995, pro forma results of operations would not have differed materially from
actual results.
From time to time, the company enters into investment arrangements,
including joint ventures, that are related to its Engineering and Construction
business. During 1995 through 1997, the majority of these expenditures related
to ongoing investments in an equity fund that focuses on energy related projects
and a number of smaller, diversified ventures.
During 1997, the company completed the sale of ACQUION, a global
provider of supply chain management services, for $12 million in cash, resulting
in a pretax gain of $7 million.
COST REDUCTION INITIATIVES
During 1997, the company recorded $25.4 million in charges related to the
implementation of certain cost reduction initiatives. These charges provide for
personnel and facility related costs. As of October 31, 1997, approximately
$10.1 million of these costs had been incurred.
INCOME TAXES
The income tax expense (benefit) included in the Consolidated Statement of
Earnings is as follows:
<TABLE>
<CAPTION>
1997 1996 1995
--------- -------- -------
$ in thousands/Year ended October 31,
<S> <C> <C> <C>
Current:
Federal $ 50,906 $ 94,864 $ 88,762
Foreign 25,801 25,872 26,803
State and local 6,947 11,767 13,172
--------------------------------------
Total current 83,654 132,503 128,737
--------------------------------------
Deferred:
Federal 19,972 13,081 (10,776)
Foreign 3,908 1,974 11,953
State and local 1,548 (2,424) 532
--------------------------------------
Total deferred 25,428 12,631 1,709
--------------------------------------
Total income tax expense $ 109,082 $ 145,134 $ 130,446
======================================
</TABLE>
A reconciliation of U.S. statutory federal income tax expense to the
company's income tax expense on earnings is as follows:
<TABLE>
<CAPTION>
1997 1996 1995
--------- -------- --------
$ in thousands/Year ended October 31,
<S> <C> <C> <C>
U.S. statutory federal
income tax expense $ 89,344 $ 144,626 $ 126,775
Increase (decrease) in
taxes resulting from:
Items without tax effect, net 17,623 (1,566) 2,452
Effect of non-U.S. tax rates 10,620 6,057 5,682
State and local income taxes 5,337 9,542 9,288
Depletion (10,051) (11,054) (10,497)
Other, net (3,791) (2,471) (3,254)
---------------------------------------
Total income tax expense $ 109,082 $ 145,134 $ 130,446
=======================================
</TABLE>
36
<PAGE> 16
Deferred taxes reflect the tax effects of differences between the
amounts recorded as assets and liabilities for financial reporting purposes and
the amounts recorded for income tax purposes. The tax effects of significant
temporary differences giving rise to deferred tax assets and liabilities are as
follows:
<TABLE>
<CAPTION>
1997 1996
--------- --------
$ in thousands/At October 31,
<S> <C> <C>
Deferred tax assets:
Accrued liabilities not currently deductible $ 217,952 $ 196,893
Tax basis of building in excess of book basis 23,130 22,999
Alternative minimum tax credit carryforwards 22,115 20,498
Net operating loss carryforwards of acquired
companies 16,376 --
Other 38,938 18,561
-------------------------
Total deferred tax assets 318,511 258,951
Valuation allowance for deferred tax assets (60,613) (38,655)
-------------------------
Deferred tax assets, net 257,898 220,296
-------------------------
Deferred tax liabilities:
Book basis of property, equipment and other
capital costs in excess of tax basis (204,916) (160,544)
Tax on unremitted non-U.S. earnings (34,917) (27,715)
Other (26,765) (24,512)
-------------------------
Total deferred tax liabilities (266,598) (212,771)
-------------------------
Net deferred tax (liabilities) assets $ (8,700) $ 7,525
=========================
</TABLE>
In 1997, the company acquired the SMA Companies which have net operating
loss carryforwards of approximately $47 million. These loss carryforwards expire
in years 2004 through 2008. Their utilization is subject to stringent
limitations under the Internal Revenue Code.
The company also has alternative minimum tax credits associated with the
coal business operated by Massey. These credits can be carried forward
indefinitely until fully utilized.
The company maintains a valuation allowance to reduce certain deferred
tax assets to amounts that are more likely than not to be realized. This
allowance primarily relates to the deferred tax assets established for loss
carryforwards and alternative minimum tax credits. Any reductions in the
allowance resulting from realization of the loss carryforwards will result in a
reduction of goodwill. Some of the allowance relates to deferred tax assets
existing at the date of the company's 1987 quasi-reorganization. Reductions in
the allowance relating to these 1987 deferred tax assets are credited to
additional capital.
Residual income taxes of approximately $12 million have not been
provided on approximately $30 million of undistributed earnings of certain
foreign subsidiaries at October 31, 1997, because the company intends to keep
those earnings reinvested indefinitely.
United States and foreign earnings before taxes are as follows:
<TABLE>
<CAPTION>
1997 1996 1995
-------- -------- --------
$ in thousands/Year ended October 31,
<S> <C> <C> <C>
United States $231,921 $363,687 $249,776
Foreign 23,348 49,531 112,438
----------------------------------
Total $255,269 $413,218 $362,214
==================================
</TABLE>
RETIREMENT BENEFITS
The company sponsors contributory and non-contributory defined contribution
retirement and defined benefit pension plans for eligible employees.
Contributions to defined contribution retirement plans are based on a percentage
of the employee's compensation. Expense recognized for these plans of
approximately $111 million in 1997, $75 million in 1996, and $69 million in
1995, is primarily related to domestic engineering and construction operations.
Contributions to defined benefit pension plans are generally at the minimum
annual amount required by applicable regulations. Payments to retired employees
under these plans are generally based upon length of service and/or a percentage
of qualifying compensation. The defined benefit pension plans are primarily
related to international engineering and construction operations, U.S. craft
employees and coal operations.
Net periodic pension income for defined benefit pension plans includes
the following components:
<TABLE>
<CAPTION>
1997 1996 1995
-------- -------- --------
$ in thousands/Year ended October 31,
<S> <C> <C> <C>
Service cost incurred during the period $ 15,301 $ 14,284 $ 12,385
Interest cost on projected
benefit obligation 23,743 22,248 21,578
Income and gains on assets invested (74,239) (75,861) (50,776)
Net amortization and deferral 26,668 33,868 11,198
------------------------------------
Net periodic pension income $ (8,527) $ (5,461) $ (5,615)
====================================
</TABLE>
37
<PAGE> 17
The ranges of assumptions indicated below were used in the determination
of net periodic pension (income) cost for the defined benefit pension plans in
Australia, Germany, the United Kingdom, the Netherlands and the United States.
These assumptions were established at the beginning of each respective fiscal
year based on the then current economic environment in each host country.
<TABLE>
<CAPTION>
1997 1996 1995
-------- -------- --------
Year ended October 31,
<S> <C> <C> <C>
Discount rates 6.5-8.25% 6.75-8.5% 7.75-9.25%
Rates of increase in
compensation levels 3.0-5.25% 3.25-5.5% 4.0-6.25%
Expected long-term rates
of return on assets 5.5-9.5% 5.75-9.5% 6.75-10.25%
</TABLE>
The following table sets forth the funded status and the pension assets
which have been recognized in the company's Consolidated Balance Sheet:
<TABLE>
<CAPTION>
1997 1996
-------- --------
<S> <C> <C>
$ in thousands/At October 31,
Actuarial present value
of benefit obligations:
Vested benefit obligation $ 311,429 $ 274,872
Nonvested benefit obligation 12,791 9,590
------------------------
Accumulated benefit obligation $ 324,220 $ 284,462
========================
Plan assets at fair value
(primarily listed stocks and bonds) $ 539,814 $ 488,458
Projected benefit obligation (358,539) (319,066)
------------------------
Plan assets in excess of projected
benefit obligation 181,275 169,392
Unrecognized net gain (44,265) (42,411)
Unrecognized net assets at implementation (11,941) (15,191)
------------------------
Pension assets $ 125,069 $ 111,790
========================
</TABLE>
Amounts shown above at October 31, 1997 and 1996 exclude the projected benefit
obligation of approximately $109 million and $114 million, respectively, and an
equal amount of associated plan assets relating to discontinued operations.
In recognition of the current economic environment in each plan's
respective host country, as of November 1, 1997 the company will adjust the
discount rates used in the determination of its benefit obligations to 6.25-7.5
percent and the rates of salary increases to 2.5-4.5 percent.
Massey participates in multiemployer defined benefit pension plans for
its union employees. Pension expense was less than $1 million in each of the
years ended October 31, 1997, 1996 and 1995. Under the Coal Industry Retiree
Health Benefits Act of 1992, Massey is required to fund medical and death
benefits of certain beneficiaries. Massey's obligation under the Act is
estimated to aggregate approximately $42 million at October 31, 1997, which will
be recognized as expense as payments are assessed. The expense recorded for such
benefits was $7 million for the year ended October 31, 1997 and $2 million for
each of the years ended October 31, 1996 and 1995.
In addition to the company's defined benefit pension plans, the company
and certain of its subsidiaries provide health care and life insurance benefits
for certain retired employees. The health care and life insurance plans are
generally contributory, with retiree contributions adjusted annually. Service
costs are accrued currently.
The accumulated postretirement benefit obligation at October 31, 1997
and 1996 was determined in accordance with the current terms of the company's
health care plans, together with relevant actuarial assumptions and health care
cost trend rates projected at annual rates ranging from 9.2 percent in 1998 down
to 5 percent in 2004 and beyond. The effect of a one percent annual increase in
these assumed cost trend rates would increase the accumulated postretirement
benefit obligation and the aggregate of the annual service and interest costs by
approximately 14 percent.
Net periodic postretirement benefit cost includes the following
components:
<TABLE>
<CAPTION>
1997 1996 1995
-------- -------- --------
$ in thousands/Year ended October 31,
<S> <C> <C> <C>
Service cost incurred during
the period $3,107 $1,672 $1,172
Interest cost on accumulated
postretirement benefit obligation 6,480 5,755 4,899
----------------------------
Net periodic postretirement
benefit cost $9,587 $7,427 $6,071
============================
</TABLE>
The following table sets forth the plans' funded status and accumulated
postretirement benefit obligation which has been fully accrued in the company's
Consolidated Balance Sheet:
<TABLE>
<CAPTION>
1997 1996
-------- --------
$ in thousands/At October 31,
<S> <C> <C>
Accumulated postretirement
benefit obligation:
Retirees $ 44,228 $ 49,912
Fully eligible active participants 18,280 16,462
Other active plan participants 23,679 17,944
Unrecognized loss (2,977) (8,545)
----------------------
Accrued postretirement benefit obligation $ 83,210 $ 75,773
======================
</TABLE>
The discount rate used in determining the accumulated postretirement
benefit obligation was 7.25 percent and 7.75 percent at October 31, 1997 and
1996, respectively.
The preceding information does not include amounts related to benefit
plans applicable to employees associated with certain contracts with the U.S.
Department of Energy because the company is not responsible for the current or
future funded status of these plans.
38
<PAGE> 18
FAIR VALUE OF FINANCIAL INSTRUMENTS
The estimated fair value of the company's financial instruments are as follows:
<TABLE>
<CAPTION>
1997 1996
---------------------- -----------------------
Carrying Fair Carrying Fair
Amount Value Amount Value
$ in thousands/At October 31,
<S> <C> <C> <C> <C>
Assets:
Cash and cash equivalents $ 299,324 $ 299,324 $ 246,964 $ 246,964
Marketable securities 10,089 10,089 69,378 69,378
Notes receivable including
noncurrent portion 39,570 45,207 116,809 120,463
Long-term investments 52,115 53,619 48,920 47,948
Liabilities:
Commercial paper and notes
payable 88,699 88,699 67,007 67,007
Long-term debt including
current portion 300,624 316,024 3,174 3,174
Other noncurrent financial
liabilities 5,240 5,240 2,556 2,556
Off-balance sheet
financial instruments:
Foreign currency contract
obligations -- (1,225) -- (1,726)
Letters of credit -- 841 -- 700
Lines of credit -- 497 -- 747
</TABLE>
Fair values were determined as follows: The carrying amounts of cash and
cash equivalents, short-term notes receivable, commercial paper and notes
payable approximates fair value because of the short-term maturity of these
instruments.
Marketable securities and long-term investments are based on quoted
market prices for these or similar instruments. Long-term notes receivable are
estimated by discounting future cash flows using the current rates at which
similar loans would be made to borrowers with similar credit ratings.
The fair value of long-term debt, including current portion, is
estimated based on quoted market prices for the same or similar issues or on the
current rates offered to the company for debt of the same maturities.
Other noncurrent financial liabilities consist primarily of deferred
payments, for which cost approximates fair value.
Foreign currency contract obligations are estimated by obtaining quotes
from brokers.
Letters of credit and lines of credit amounts are based on fees
currently charged for similar agreements or on the estimated cost to terminate
or settle the obligations.
LONG-TERM DEBT
Long-term debt comprises:
<TABLE>
<CAPTION>
1997 1996
-------- --------
$ in thousands/At October 31,
<S> <C> <C>
6.95% Senior Notes due March 1, 2007 $300,000 $ --
Other notes 624 3,174
-------- --------
300,624 3,174
Less: Current portion 116 207
-------- --------
Long-term debt due after one year $300,508 $ 2,967
</TABLE>
In March 1997, the company issued $300 million of 6.95% Senior Notes
(the Notes) due March 1, 2007 with interest payable semiannually on March 1 and
September 1 of each year, commencing September 1, 1997. The Notes were sold at a
discount for an aggregate price of $296.7 million. The Notes are redeemable, in
whole or in part, at the option of the company at any time at a redemption price
equal to the greater of (i) 100 percent of the principal amount of the Notes or
(ii) as determined by a Quotation Agent as defined in the offering prospectus.
The company has unsecured committed revolving long-term lines of credit
with banks from which it may borrow for general corporate purposes up to a
maximum of $250 million. Commitment and facility fees are paid on these lines.
In addition, the company has $954 million in short-term uncommitted lines of
credit. Borrowings under lines of credit and revolving credit agreements bear
interest at prime or rates based on the London Interbank Offered Rate ("LIBOR"),
domestic certificates of deposit or other rates which are mutually acceptable to
the banks and the company. At October 31, 1997, no amounts were outstanding
under the committed lines of credit. As of that date, $176 million of the
short-term uncommitted lines of credit were used to support undrawn letters of
credit issued in the ordinary course of business.
The company had $62 million and $30 million in unsecured commercial
paper outstanding at October 31, 1997 and 1996, respectively. The commercial
paper was issued at a discount with a weighted-average effective interest rate
of 5.6 percent and 5.3 percent in 1997 and 1996, respectively. Maturities of
commercial paper ranged from 22 to 35 days in 1997 and 28 to 91 days in 1996.
The weighted-average maturities were 12 and 21 days at October 31, 1997 and
1996, respectively. The maximum and average balances outstanding for the years
ended October 31, 1997 and 1996 were $212 million and $111 million,
respectively, and $75 million and $38 million, respectively, with
weighted-average interest rates of 5.5 percent for both years.
39
<PAGE> 19
OTHER NONCURRENT LIABILITIES
The company maintains appropriate levels of insurance for business risks.
Insurance coverages contain various deductible amounts for which the company
provides accruals based on the aggregate of the liability for reported claims
and an actuarially determined estimated liability for claims incurred but not
reported. Other noncurrent liabilities include $70 million and $92 million at
October 31, 1997 and 1996, respectively, relating to these liabilities.
STOCK PLANS
The company's executive stock plans, approved by the shareholders, provide for
grants of nonqualified or incentive stock options, restricted stock awards and
stock appreciation rights ("SARS"). All executive stock plans are administered
by the Organization and Compensation Committee of the Board of Directors
("Committee") comprised of outside directors, none of whom are eligible to
participate in the plans. Stock options may be granted with or without SARS.
Grant prices are determined by the Committee and are established at the fair
market value of the company's common stock at the date of grant. Options and
SARS normally extend for 10 years and become exercisable over a vesting period
determined by the Committee, which is presently in installments of 25 percent
per year commencing one year from the date of grant. The company issued 44,120
options and 66,860 options in 1997 and 1996, respectively, that will vest only
if certain performance related conditions are met.
Restricted stock awards issued under the plans provide that shares
awarded may not be sold or otherwise transferred until restrictions as
established by the Committee have lapsed. Upon termination of employment, shares
upon which restrictions have not lapsed must be returned to the company.
Restricted stock issued under the plans totaled 186,390 shares and 172,770
shares in 1997 and 1996, respectively.
Effective November 1, 1996, the company adopted Statement of Financial
Accounting Standards No. 123, "Accounting for Stock-Based Compensation" (SFAS
No. 123). As permitted by the standard, the company has elected to continue
following the guidance of APB Opinion No. 25, "Accounting for Stock Issued to
Employees," for measurement and recognition of stock-based transactions with
employees. Compensation cost recognized for the company's performance-based
stock plans totaled less than $1 million in 1997, $19 million in 1996 and $15
million in 1995. Under APB Opinion No. 25, no compensation cost is recognized
for the option plans where vesting provisions are based only on the passage of
time. Had the company recorded compensation expense using the accounting method
recommended by SFAS No. 123, net earnings and earnings per share would have been
reduced to the pro forma amounts as follows:
<TABLE>
<CAPTION>
1997 1996
----------- ------------
$ in thousands, except per share amounts/
<S> <C> <C>
Year ended October 31,
Net earnings: As Reported $ 146,187 $ 268,084
Pro Forma 143,663 267,361
Earnings per share: As Reported $ 1.73 $ 3.17
Pro Forma 1.70 3.16
</TABLE>
Because SFAS No. 123 is applicable only to options granted subsequent to October
31, 1995, its pro forma effect will not be fully reflected until 1999. The
results above are not likely to be representative of the effects of applying
SFAS No. 123 on reported net earnings or loss for future years as these amounts
reflect the expense for only one or two years vesting.
The fair value of each option grant is estimated on the date of grant by
using the Black-Scholes option-pricing model. The following weighted-average
assumptions were used for grants in 1997 and 1996:
<TABLE>
<CAPTION>
1997 1996
-------- -------
<S> <C> <C>
Expected option lives (years) 6 6
Risk-free interest rates 6.30% 6.54%
Expected dividend yield 1.15% 1.12%
Expected volatility 24.58% 20.50%
</TABLE>
The weighted-average fair value of options granted during 1997 and 1996 was $17
and $20, respectively.
The following table summarizes stock option activity:
<TABLE>
<CAPTION>
Weighted
Average
Exercise
Stock Price
Options Per Share
--------- ----------
<S> <C> <C>
OUTSTANDING AT OCTOBER 31, 1994 2,071,506 $ 39
-------------------------
Granted 2,034,270 49
Expired or canceled (23,834) 43
Exercised (266,336) 37
-------------------------
OUTSTANDING AT OCTOBER 31, 1995 3,815,606 45
-------------------------
Granted 1,046,700 64
Expired or canceled (56,010) 49
Exercised (466,918) 37
-------------------------
OUTSTANDING AT OCTOBER 31, 1996 4,339,378 50
-------------------------
Granted 114,060 61
Expired or canceled (117,404) 53
Exercised (414,731) 39
-------------------------
OUTSTANDING AT OCTOBER 31, 1997 3,921,303 $ 51
=========================
Exercisable at:
October 31, 1997 1,964,137
October 31, 1996 1,536,063
October 31, 1995 1,406,583
</TABLE>
At October 31, 1997, there were 2,982,950 shares available for future grant.
Available for grant includes shares which may be granted as either stock options
or restricted stock, as determined by the Committee under the 1996 and 1988
Fluor Executive Stock Plans.
40
<PAGE> 20
At October 31, 1997, 2,071,044 of the 3,921,303 options outstanding have
exercise prices between $20 and $44, with a weighted-average exercise price of
$42 and a weighted-average remaining contractual life of 5.8 years; 1,268,023 of
these options are exercisable with a weighted-average exercise price of $42. The
remaining 1,850,259 outstanding options have exercise prices between $51 and
$68, with a weighted-average exercise price of $61 and a weighted-average
remaining contractual life of 8.4 years; 696,114 of these options are
exercisable with a weighted-average exercise price of $61. Included in the total
outstanding options above are 603,278 options that vest only if certain
performance conditions are met, with a weighted-average exercise price of $46.
These options expire on December 31, 1997.
LEASE OBLIGATIONS
Net rental expense amounted to approximately $92 million, $77 million, and $67
million in 1997, 1996, and 1995, respectively. The company's lease obligations
relate primarily to office facilities, equipment used in connection with
long-term construction contracts and other personal property.
The company's obligations for minimum rentals under noncancelable leases
are as follows:
<TABLE>
<CAPTION>
$ in thousands/At October 31,
<S> <C>
1998 $44,071
1999 34,293
2000 21,237
2001 17,055
2002 12,578
Thereafter $65,697
</TABLE>
At October 31, 1997 and 1996, obligations under capital leases of
approximately $3 million and $4 million, respectively, are included in other
noncurrent liabilities.
CONTINGENCIES AND COMMITMENTS
The company and certain of its subsidiaries are involved in litigation in the
ordinary course of business. The company and certain of its engineering and
construction subsidiaries are contingently liable for commitments and
performance guarantees arising in the ordinary course of business. Claims
arising from engineering and construction contracts have been made against the
company by clients, and the company has made certain claims against clients for
costs incurred in excess of the current contract provisions. The company does
not expect that the foregoing matters will have a material adverse effect on its
consolidated financial position or results of operations.
Financial guarantees, made in the ordinary course of business on behalf
of clients and others in certain limited circumstances, are entered into with
financial institutions and other credit grantors and generally obligate the
company to make payment in the event of a default by the borrower. Most
arrangements require the borrower to pledge collateral in the form of property,
plant and equipment which is deemed adequate to recover amounts the company
might be required to pay. As of October 31, 1997, the company had extended
financial guarantees on behalf of certain clients and other unrelated third
parties totaling approximately $48 million.
The company's operations are subject to and affected by federal, state
and local laws and regulations regarding the protection of the environment. The
company maintains reserves for potential future environmental costs where such
obligations are either known or considered probable, and can be reasonably
estimated.
The sale by the company of its Lead business included St. Joe Minerals
Corporation ("St. Joe") and its environmental liabilities for several different
lead mining, smelting and other lead-related environmental sites. As a condition
of the St. Joe sale, however, the company retained responsibility for certain
non-lead-related environmental liabilities arising out of St. Joe's former zinc
mining and smelting division, but only to the extent that such liabilities are
not covered by St. Joe's comprehensive general liability insurance. These
liabilities arise out of three zinc facilities located in Bartlesville,
Oklahoma; Monaca, Pennsylvania; and Balmat, New York.
The company believes, based upon present information available to it,
that its reserves with respect to future environmental costs are adequate and
such future costs will not have a material effect on the company's consolidated
financial position, results of operations or liquidity. However, the imposition
of more stringent requirements under environmental laws or regulations, new
developments or changes regarding site cleanup costs or the allocation of such
costs among potentially responsible parties, or a determination that the company
is potentially responsible for the release of hazardous substances at sites
other than those currently identified, could result in additional expenditures,
or the provision of additional reserves in expectation of such expenditures.
41
<PAGE> 21
OPERATIONS BY BUSINESS SEGMENT AND
GEOGRAPHIC AREA
The Engineering and Construction segment, the company's principal operating
business, includes subsidiaries engaged in the design, engineering, procurement,
construction, technical services and maintenance of facilities for process,
industrial, power/government and diversified services clients. Coal segment
amounts include the operations of Massey.
In 1995, revenue included approximately $2 billion from subsidiaries of
Shell Oil Company related primarily to two projects that were awarded in 1993.
Identifiable assets are those tangible and intangible assets used in the
operation of each of the business segments and geographic areas. Corporate
assets are principally cash and cash equivalents, marketable securities and
nontrade receivables.
Engineering services for international projects are often performed
within the United States or a country other than where the project is located.
Revenues associated with these services have been classified within the
geographic area where the work was performed.
In June 1997, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 131, "Disclosures about Segments of an
Enterprise and Related Information" (SFAS No. 131). SFAS No. 131 establishes new
standards for reporting information about operating segments in interim and
annual financial statements. This statement is effective for the company's
fiscal year 1999.
42
<PAGE> 22
OPERATIONS BY BUSINESS SEGMENT
<TABLE>
<CAPTION>
Revenues Operating Expenses
-------------------------------------- ------------------------------
1997 1996 1995 1997 1996 1995
$ in millions
<S> <C> <C> <C> <C> <C> <C>
Engineering and Construction $ 13,217.5 $ 10,054.4 $ 8,451.6 $ 122.2 $ 320.0 $ 286.0
Coal 1,081.0 960.8 849.8 154.8 134.5 111.0
-------------------------------------- ------------------------------
$ 14,298.5 $ 11,015.2 $ 9,301.4 $ 277.0 $ 454.5 $ 397.0
====================================== ==============================
</TABLE>
<TABLE>
<CAPTION>
Depreciation, Depletion
Identifiable Assets Capital Expenditures & Amortization
------------------------------------ ------------------------------ ------------------------------
1997 1996 1995 1997 1996 1995 1997 1996 1995
$ in millions
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Engineering and Construction $ 2,836.2 $ 2,213.4 $ 1,572.6 $ 199.1 $ 171.6 $ 137.1 $ 117.0 $ 88.7 $ 62.9
Coal 1,619.4 1,384.0 1,191.2 267.1 220.8 181.8 131.3 105.4 83.7
Corporate 242.2 354.3 465.1 -- -- -- -- -- .4
------------------------------------ ------------------------------ ------------------------------
$ 4,697.8 $ 3,951.7 $ 3,228.9 $ 466.2 $ 392.4 $ 318.9 $ 248.3 $ 194.1 $ 147.0
==================================== ============================== ==============================
</TABLE>
OPERATIONS BY GEOGRAPHIC AREA
<TABLE>
<CAPTION>
Revenues Operating Profit
------------------------------------ --------------------------------
1997 1996 1995 1997 1996 1995
<S> <C> <C> <C> <C> <C> <C>
$ in millions
United States $ 9,347.2 $ 6,783.5 $ 5,814.5 $ 255.7 $ 396.5 $ 297.4
Europe 1,420.0 1,426.6 1,637.2 2.3 23.6 27.7
Central and South America 1,109.3 1,210.0 801.2 12.2 (13.9) 9.6
Asia Pacific (includes Australia) 1,544.5 1,042.8 780.0 16.3 36.5 49.4
Middle East and Africa 549.3 287.6 30.5 (22.9) 4.7 7.2
Canada 328.2 264.7 238.0 13.4 7.1 5.7
------------------------------------ --------------------------------
$ 14,298.5 $ 11,015.2 $ 9,301.4 $ 277.0 $ 454.5 $ 397.0
==================================== ================================
</TABLE>
<TABLE>
<CAPTION>
Identifiable Assets
----------------------------------
1997 1996 1995
<S> <C> <C> <C>
$ in millions
United States $ 3,801.7 $ 3,392.3 $ 2,764.2
Europe 225.1 158.4 204.3
Central and South America 210.4 145.6 92.3
Asia Pacific (includes Australia) 314.7 165.0 84.2
Middle East and Africa 78.4 30.8 21.4
Canada 67.5 59.6 62.5
----------------------------------
$ 4,697.8 $ 3,951.7 $ 3,228.9
==================================
</TABLE>
Included in United States revenues are export sales to unaffiliated customers of
$1.9 billion in 1997, $1 billion in 1996 and $.7 billion in 1995.
The following table reconciles business segment operating profit with the
earnings before taxes:
<TABLE>
<CAPTION>
1997 1996 1995
---- ---- ----
<S> <C> <C> <C>
$ in millions
Operating profit $ 277.0 $ 454.5 $ 397.0
Interest (expense) income, net (7.5) 11.6 19.5
Corporate administrative and general expense (13.2) (48.1) (48.6)
Other items, net (1.0) (4.8) (5.7)
--------------------------------
Earnings before taxes $ 255.3 $ 413.2 $ 362.2
================================
</TABLE>
43
<PAGE> 23
REPORTS OF MANAGEMENT AND INDEPENDENT AUDITORS
[LOGO]
MANAGEMENT
The company is responsible for preparation of the accompanying consolidated
balance sheet and the related consolidated statements of earnings, cash flows
and shareholders' equity. These statements have been prepared in conformity with
generally accepted accounting principles and management believes that they
present fairly the company's consolidated financial position and results of
operations. The integrity of the information presented in the financial
statements, including estimates and judgments relating to matters not concluded
by fiscal year end, is the responsibility of management. To fulfill this
responsibility, an internal control structure designed to protect the company's
assets and properly record transactions and events as they occur has been
developed, placed in operation and maintained. The internal control structure is
supported by an extensive program of internal audits and is tested and evaluated
by the independent auditors in connection with their annual audit. The Board of
Directors pursues its responsibility for financial information through an Audit
Committee of Directors who are not employees. The internal auditors and the
independent auditors have full and free access to the Committee. Periodically,
the Committee meets with the independent auditors without management present to
discuss the results of their audits, the adequacy of the internal control
structure and the quality of financial reporting.
/s/ J. MICHAL CONAWAY
J. Michal Conaway
Senior Vice President and
Chief Financial Officer
INDEPENDENT AUDITORS
Board of Directors and Shareholders
Fluor Corporation
We have audited the accompanying consolidated balance sheet of Fluor Corporation
as of October 31, 1997 and 1996, and the related consolidated statements of
earnings, cash flows, and shareholders' equity for each of the three years in
the period ended October 31, 1997. These financial statements are the
responsibility of the company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the consolidated financial position of Fluor
Corporation at October 31, 1997 and 1996, and the consolidated results of its
operations and its cash flows for each of the three years in the period ended
October 31, 1997, in conformity with generally accepted accounting principles.
/s/ ERNST & YOUNG LLP
Orange County, California
November 18, 1997
44
<PAGE> 24
QUARTERLY FINANCIAL DATA (UNAUDITED)
[LOGO]
The following is a summary of the quarterly results of operations:
<TABLE>
<CAPTION>
First Second Third Fourth
Quarter Quarter Quarter Quarter
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
$ in thousands, except per share amounts
1997
Revenues $ 3,434,061 $ 3,185,833 $ 3,675,905 $ 4,002,742
Gross margin 106,774 (73,836) 108,591 134,442
Earnings (loss) before taxes 95,625 (78,407) 102,044 136,007
Net earnings (loss) 62,035 (70,134) 66,242 88,044
Earnings (loss) per share $ .73 $ (.83) $ .79 $ 1.04
============================================================
1996
Revenues $ 2,402,414 $ 2,582,229 $ 2,702,821 $ 3,327,728
Gross margin 99,072 105,054 112,862 132,755
Earnings before taxes 89,763 97,082 104,866 121,507
Net earnings 57,448 63,700 68,077 78,859
Earnings per share $ .68 $ .75 $ .81 $ .93
============================================================
</TABLE>
45
<PAGE> 25
SHAREHOLDERS' REFERENCE
COMMON STOCK INFORMATION
At December 31, 1997, there were 83,242,322 shares outstanding and
approximately 13,140 shareholders of record of Fluor's common stock.
The following table sets forth for the periods indicated the cash
dividends paid per share of common stock, and the high and low sales prices of
such common stock as reported in the Consolidated Transactions Reporting System.
COMMON STOCK AND DIVIDEND INFORMATION
<TABLE>
<CAPTION>
Price Range
Dividends -------------------------
Per Share High Low
----------- -----------
<S> <C> <C> <C>
FISCAL 1997
First Quarter $ 0.19 $ 71.750 $ 61.625
Second Quarter 0.19 75.875 49.750
Third Quarter 0.19 61.500 46.500
Fourth Quarter 0.19 62.500 40.250
--------
$ 0.76
FISCAL 1996
First Quarter $ 0.17 $ 68.000 $ 54.750
Second Quarter 0.17 71.875 61.875
Third Quarter 0.17 67.375 57.750
Fourth Quarter 0.17 67.375 59.500
--------
$ 0.68
</TABLE>
FORM 10-K
A copy of the Form 10-K, which is filed with the Securities and Exchange
Commission, is available at no charge upon request.
Write to:
Senior Vice President-Law,
Fluor Corporation
3353 Michelson Drive
Irvine, California 92698
(714) 975-2000
REGISTRAR AND TRANSFER AGENT
ChaseMellon Shareholder Services, L.L.C.
400 South Hope Street
Fourth Floor
Los Angeles, California 90071
and
ChaseMellon Shareholder Services, L.L.C.
85 Challenger Road
Ridgefield Park, New Jersey 07660
For change of address, lost dividends, or lost stock certificates, write or
telephone:
ChaseMellon Shareholder Services, L.L.C.
P. O. Box 3315
South Hackensack, New Jersey 07606-1915
Attn: Securityholder Relations
(800) 813-2847
Web page address:
www.chasemellon.com
INDEPENDENT AUDITORS
Ernst & Young LLP
18400 Von Karman Avenue
Irvine, California 92612
ANNUAL SHAREHOLDERS' MEETING
Annual report and proxy statement are mailed about January 30. Fluor's annual
meeting of shareholders will be held at 9:00 a.m. on March 10, 1998 at:
The Sutton Place Hotel
4500 MacArthur Boulevard
Newport Beach, California
STOCK TRADING
Fluor's stock is traded on the New York, Chicago, Pacific, Amsterdam, London and
Swiss Stock Exchanges. Common stock domestic trading symbol: FLR.
DIVIDEND REINVESTMENT PLAN
Fluor's Dividend Reinvestment Plan provides shareholders of record with the
opportunity to conveniently and economically increase their ownership in
Fluor. Through the plan, shareholders can automatically reinvest their cash
dividends in shares of Fluor common stock. A minimum balance of 50 shares is
required for enrollment. Optional cash investments may also be made in
additional Fluor shares ranging from a minimum of $100 per month to a maximum
of $10,000 per quarter. For details on the plan, contact Fluor's agent,
ChaseMellon Shareholder Services (800) 813-2847.
DUPLICATE MAILINGS
Shares owned by one person but held in different forms of the same name result
in duplicate mailing of shareholder information at added expense to the
company. Such duplication can be eliminated only at the direction of the
shareholder. Please notify ChaseMellon Shareholder Services in order to
eliminate duplication.
History of Stock Dividends and Splits Since Going Public in 1950
08/23/57 20% Stock Dividend
12/15/61 5% Stock Dividend
03/11/63 5% Stock Dividend
03/09/64 5% Stock Dividend
03/08/65 5% Stock Dividend
02/14/66 5% Stock Dividend
03/24/66 2 for 1 Stock Split
03/27/67 5% Stock Dividend
02/09/68 5% Stock Dividend
03/22/68 2 for 1 Stock Split
05/16/69 5% Stock Dividend
03/06/70 5% Stock Dividend
03/05/71 5% Stock Dividend
03/10/72 5% Stock Dividend
03/12/73 5% Stock Dividend
03/11/74 3 for 2 Stock Split
08/13/79 3 for 2 Stock Split
07/18/80 2 for 1 Stock Split
46
<PAGE> 1
EXHIBIT 21
FLUOR CORPORATION SUBSIDIARIES
<TABLE>
<CAPTION>
Organized
Name of Company Under Laws of
--------------- -------------
<S> <C>
FLUOR CORPORATION Subsidiaries (1) Delaware
American Construction Equipment Company, Inc. California
AMECO Contractors Rentals, Inc. (17) Philippines
Fluorven California
Maquinaria Panamericana, S.A. de C.V. (18) Mexico
American Equipment Company, Inc. S. Carolina
Ameco Services, S. de R.L. de C.V. Mexico
AMECO Services Inc. Delaware
AMEC Equipment Leasing France
Grand Greenville Land, Inc. Philippines
J. W. Burress, Incorporated Virginia
S & R Equipment Co., Inc. Ohio
SMA Equipment Co., Inc. Delaware
Stith Equipment Co., Inc. Delaware
SMA Information Systems Inc. Delaware
Apex Coal Company Virginia
Claiborne Fuels, Inc. California
Coral Drilling, C.A. Venezuela
Daniel International Corporation S. Carolina
Daniel Navarra, S.A. Spain
Fluor Daniel Engineering, Inc. Ohio
Materiales y Equipos Auxiliares para la Construccion, S.A. Spain
FD Engineers & Constructors, Inc. California
Fluor Constructors International, Inc. California
Fluor Constructors Canada Ltd. New Brunswick
Fluor Constructors Indonesia, Inc. California
Fluor Management and Technical Services, Inc. California
Fluor Daniel America, Ltda. California
Fluor Daniel Engineers & Consultants Ltd. Mauritius
Fluor Daniel India Private Limited (19) India
Fluor Daniel, Inc. California
ADP Marshall, Inc. Arizona
ADP/FD of Nevada, Inc. Nevada
ADP Marshall International, Inc. Delaware
ADP Marshall Limited Ireland
ADPM, L.L.C. (2) Delaware
Appalachian Synfuel, LLC W. Virginia
A.R.C. Construction Consultants International, Inc. Texas
DAX Industries, Inc. (8) Texas
Efdee Connecticut Architects, Inc. Connecticut
Efdee Engineering Corporation N. Carolina
Efdee Mississippi Architects, A Professional Association Mississippi
Efdee New York Engineers & Architects P.C. New York
Encee Architecture Services, P.C. N. Carolina
Evergreen Equipment and Personnel Leasing, Inc. Rhode Island
</TABLE>
<PAGE> 2
<TABLE>
<CAPTION>
Organized
Name of Company Under Laws of
--------------- -------------
<S> <C>
Fluor Corporation
FD Engineers & Constructors, Inc.
Fluor Daniel, Inc. (continued)
FD Mexico, Inc. Delaware
FDAE Corporation New Jersey
FDCM of Mississippi, Inc. Mississippi
FDEE Consulting, Inc. California
FDHM, Inc. California
FD/MK Limited Liability Company (3) Delaware
Fluor Chile, Inc. California
Fluor Daniel Chile Ingenieria y Construccion S.A. Chile
Ingenieria y Construcciones Fluor Daniel
Chile Limitada Chile
Fluor Colombia Limited Delaware
Fluor Cyprus Limited Cyprus
Fluor Daniel, a Professional Architectural Corporation Louisiana
Fluor Daniel A&E Services, Inc. California
Fluor Daniel Alaska, Inc. Alaska
Fluor Daniel Alumatech, Inc. Delaware
Fluor Daniel Asia, Inc. California
P.T. Fluor Daniel Indonesia (20) Indonesia
P.T. Nusantara Power Services (2) Indonesia
Fluor Daniel Brasil Engenharia e Servicos Ltda. Brazil
Fluor Daniel Canada, Inc. New Brunswick
Fluor Daniel International Services Inc.(15) Barbados
Fluor Daniel Wright Ltd. New Brunswick
Compania Minera Explowel Ecuador
Lynx Geosystems Inc. Canada
Saskwright Engineers Limited Canada
Wright Engineers (Chile) Limitada Chile
Wright Engineers Limitada Peru Peru
TRS Staffing Solutions (Canada) Inc. Canada
Wright Engineers (International) Limited Bermuda
Fluor Daniel Caribbean, Inc. Delaware
Daniel Construction Company, Inc. Tennessee
DMIS, Inc. S. Carolina
Facility & Plant Services, Inc. S. Carolina
Fluor Daniel Export Services, Inc. Delaware
Fluor Daniel International (Malaysia) Sdn. Bhd. Malaysia
Fluor Daniel Maintenance Services, Inc. Delaware
Fluor Daniel Services Corporation Delaware
Fluor Daniel China, Inc. California
Fluor Daniel China Services, Inc. California
</TABLE>
2
<PAGE> 3
<TABLE>
<CAPTION>
Organized
Name of Company Under Laws of
--------------- -------------
<S> <C>
Fluor Corporation
FD Engineers & Constructors, Inc.
Fluor Daniel, Inc.
Fluor Daniel China Technology, Inc. California
Fluor Daniel Coal Services International, Inc. Delaware
Fluor Daniel Construction Company California
Fluor Daniel Development Corporation California
Crown Energy Company New Jersey
Fluor Daniel Modesto, Inc. California
Wilmore/Fluor Modesto LLC (5) California
Fluor Daniel Temecula, Inc. California
Fluor Daniel Tempe, Inc. California
Fluor Daniel Ada, Inc.(5) Idaho
Gloucester Limited, Inc. California
Gloucester Limited II, Inc. California
Tarrant Energy, Inc. California
Fluor Daniel Eastern, Inc. California
P.T. Fluor Daniel Indonesia (19) Indonesia
Fluor Daniel Energy Investments, Inc. Delaware
Fluor Daniel Engineers & Constructors, Inc. Delaware
Fluor Daniel Project Consultants
(Shenzhen) Co., Ltd. P.R.C.
Fluor Daniel Engineers & Constructors, Ltd. California
AEC International, Ltd. (3) Korea
Project Administrative Services, Limited(5) Hong Kong
Fluor Daniel Environmental Strategies, Inc. Delaware
Fluor Daniel Espana, S.A. California
Daniel International (Saudi Arabia) Ltd. Saudi Arabia
Fluor Arabia Limited (5) Saudi Arabia
Fluor Daniel Eurasia, Inc. California
Fluor Daniel Europe B.V. Netherlands
Asystem Services International B.V. Netherlands
Fluor Daniel Belgium, N.V. Belgium
Fluor Daniel B.V. Netherlands
Acquion B.V. Netherlands
Fluor Daniel Consultants B.V. Netherlands
Fluor Daniel Engineering and Construction
Services Limited Turkey
International Refinery Contractors C.V.(4) Netherlands
International Refinery Contractors B.V.(5) Netherlands
Prochem S.A.(6) Poland
TRS Staffing Solutions B.V. Netherlands
Fluor Daniel Eastern Services B.V. Netherlands
Prosynchem Sp.z o.o. Poland
Fluor Daniel Fernald, Inc. California
Fluor Environmental Resources Management
Services, Inc. Delaware
Fluor Daniel Florida Rail, Inc. Delaware
Fluor Daniel Global Contracting Limited Guernsey
Fluor Daniel Global Limited Guernsey
Fluor Daniel Global Placement Limited Guernsey
Fluor Daniel Global Placement Services Limited Guernsey
</TABLE>
3
<PAGE> 4
<TABLE>
<CAPTION>
Organized
Name of Company Under Laws of
--------------- -------------
<S> <C>
Fluor Corporation
FD Engineers & Constructors, Inc.
Fluor Daniel, Inc. (continued)
Fluor Daniel Global Services Limited Guernsey
Fluor Daniel Global Support Services Limited Guernsey
Fluor Daniel Global TRS Limited Guernsey
Fluor Daniel Global TRS Services Limited Guernsey
Fluor Daniel GmbH Germany
Fluor Daniel Kft.(15) Hungary
Fluor Daniel Group, Inc. Delaware
Chemgineering Holding Company GmbH (7) Switzerland
Bertrams Chemgineering AG Switzerland
Fluor Daniel Chemgineering GmbH Germany
Chemgineering Planung GmbH Austria
Fluor Daniel GTI, Inc. (9) Delaware
Fluor Daniel Hanford, Inc. Washington
Fluor Daniel, Inc. - Philippines Philippines
Fluor Daniel India, Inc. California
Fluor Daniel International Limited U.K.
First Legal Recruitment Limited U.K.
First Accountancy Limited U.K.
First Recruitment Limited U.K.
Fluor Daniel Limited U.K.
Fluor Ocean Services Limited U.K.
K Home Engineering Limited U.K.
Mathos Services Limited U.K.
TA Group Limited (21) U.K.
TRS Management Resources PLC U.K.
Antony Dunlop Associates Limited U.K.
(The) Management Resources Group
(Services) Limited U.K.
David Chorley Associates Limited U.K.
Hotel Accounts Resources Limited U.K.
Times Group Limited U.K.
MRG Human Resources Limited U.K.
SAP Services Limited U.K.
Times Computer Group Limited U.K.
Times Computer Services Limited U.K.
TRS Staffing Solutions (U.K.) Limited U.K.
Fluor Daniel International Services Inc. (16) Barbados
Fluor Daniel (Japan) Inc. Japan
Fluor Daniel Kft.(16) Hungary
Fluor Daniel Latin America, Inc. California
Fluor-Daniel (Malaysia) Sdn. Bhd. Malaysia
Fluor Daniel Mexico S.A. California
ICA-Fluor Daniel, S. de R.L. de C.V. (10) Mexico
Fluor Daniel Mining & Metals, Ltd. California
Fluor Daniel New Zealand Limited California
Fluor Daniel Northwest, Inc. Washington
Fluor Daniel Northwest Services, Inc. Washington
Fluor Daniel (NPOSR), Inc. Delaware
Fluor Daniel Overland Express, Inc. Delaware
Fluor Daniel Overseas, Inc. California
Fluor Daniel Pacific, Inc. California
Fluor Daniel P.R.C., Ltd. California
Fluor Daniel Properties Limited U.K.
</TABLE>
4
<PAGE> 5
<TABLE>
<CAPTION>
Organized
Name of Company Under Laws of
--------------- -------------
<S> <C>
Fluor Corporation
FD Engineers & Constructors, Inc.
Fluor Daniel, Inc. (continued)
Fluor Daniel Pty. Ltd. Australia
Civil and Mechanical Maintenance Pty. Ltd. Australia
Fluor Daniel Constructors Pty. Ltd. Australia
Fluor Daniel Power & Maintenance Services Pty. Ltd. Australia
Fluor Daniel Gas Services Pty. Ltd. Australia
Fluor Daniel (Qld) Pty. Ltd. Australia
Karratha Engineering Services Pty. Ltd. Australia
Signet Holdings Pty. Ltd. Australia
Independent Metallurgical Laboratories Pty. Ltd. Australia
Signet Engineering Pty. Ltd. Australia
Signet Ingenieria S.A. Chile
Constructora Lequena S.A. Chile
Signet International Holdings Pty. Ltd. Australia
Tengis Design Services Pty. Ltd. Australia
Westquip Australia Pty Ltd. Australia
TRS Staffing Solutions (Australia) Pty Ltd Australia
Phoenix Contracting Pty Limited Australia
Fluor Daniel Pulp & Paper, Inc. California
Fluor Daniel Rocky Mountain, Inc. Colorado
Fluor Daniel S.A. France
Fluor Daniel, S.A. Spain
Fluor Daniel Sales Corporation West Indies
Fluor Daniel South America Limited California
Fluor Daniel South East Asia, Ltd. California
Fluor Daniel Southeast, Inc. California
Fluor Daniel Technical Services, Inc. Texas
Fluor Daniel Thailand Holdings Corporation California
Fluor Daniel Telecom (Thailand) Co., Ltd. Thailand
Fluor Daniel Thailand, Ltd. California
Fluor Egypt Egypt
Fluor Engineering Corporation Michigan
Fluor Engineers, Inc. Delaware
Tecnofluor, C.A. (11) Venezuela
Tecnoconsult Ingenieros Consultores, S.A.(11) Venezuela
Fluor Hong Kong Limited Hong Kong
Fluor Indonesia, Inc. California
P.T. Panca Perintis Indonesia Indonesia
Fluor International, Inc. California
Fluor International Limited Bermuda
Fluor Iran Iran
Fluor Italia S.r.l. Italy
Fluor-Korea Corporation, Ltd. (The) Korea
Fluor Mideast Limited Bermuda
Fluor Plant Services International, Inc. California
</TABLE>
5
<PAGE> 6
<TABLE>
<CAPTION>
Organized
Name of Company Under Laws of
--------------- -------------
<S> <C>
Fluor Corporation
FD Engineers & Constructors, Inc.
Fluor Daniel, Inc. (continued)
Fluor Plant Services International Ltd. Bermuda
Fluor International Nigeria Limited Nigeria
Fluor Technical Services Limited California
Fluor Texas, Inc. Texas
Fluor Venezuela, S.A. Venezuela
Marshall Development Corporation Rhode Island
Nutmeg Valley Resources, Inc. California
Ranhill-Fluor Daniel Sdn. Bhd. Malaysia
Signet Technology Inc. Colorado
Soli-Flo, LLC (12) Delaware
Soli-Flo, Inc. California
Soli-Flo Partners, L.P. California
Soli-Flo Material Transfer, L.P. California
Stanhope Management Services Limited U.K.
TDF, Inc. California
Barringford Ltd. B. Virgin Isles
Bishopsford Engineering AG Switzerland
Buckleford Corp. N.V. Antilles
Buckleshell Engineering Services Ltd. Jersey
Fluor Daniel SA (PTY) Ltd. Liechtenstein
Rhus Investments (PTY) Ltd. R. South Africa
Fluor Daniel Engineers SA (PTY) Ltd. Liechtenstein
Trans-Africa Projects Ltd. (5) Mauritius
Trans-Africa Projects (Pty) Ltd. (5) R. South Africa
Fluor South Africa (Pty) Ltd. R. South Africa
Northern Project Services Ltd. B. Virgin Isles
Rama Engineering Services B.V. Netherlands
Ramasa (PTY) Ltd. R. South Africa
Fluor Properties (PTY) Ltd. R. South Africa
Springbok Consolidated Ltd. U.K.
Venezco, Inc. California
Whidbey Services Co. Nevada
Williams Brothers Engineering Company Delaware
Fluor Daniel Argentina, Inc. Delaware
Williams Brothers Engineering Limited U.K.
Williams Brothers Engineering Pty. Ltd. Australia
Williams Brothers International Limited Guernsey
Williams Brothers Process Services, Inc. Delaware
Wireless Engineering Services Group, LLC (5) Delaware
Wright Engineers, Inc. Nevada
Fluor Daniel Telecommunications Corporation California
Indo-Mauritian Affiliates Limited Mauritius
Fluor Daniel India Private Limited (20) India
Power Maintenance Services, Inc. Delaware
Strategic Organizational Systems Enterprises, Inc. California
Strategic Organizational Systems Construction Division, Inc. California
</TABLE>
6
<PAGE> 7
<TABLE>
<CAPTION>
Organized
Name of Company Under Laws of
--------------- -------------
<S> <C>
Fluor Corporation
FD Engineers & Constructors, Inc.
Strategic Organizational Systems Enterprises, Inc.(continued)
Strategic Organizational Systems Environmental Division, Inc. Oklahoma
Strategic Organizational Systems Environmental Division, Inc. Louisiana
Strategic Organizational Systems Environmental
Engineering Division, Inc. Texas
SOS International, Inc. Alabama
Strategic Organizational Systems Environmental
Engineering California Division, Inc. California
Strategic Organizational Systems
Southern California Division Inc. California
TRS International Payroll Co. Texas
TRS Staffing Solutions, Inc. S. Carolina
Corico Corporation N. Hampshire
The Consol Group, Inc. (14) N. Hampshire
Contract Solutions, Inc. N. Hampshire
The Consol Group, Inc. (14) N. Hampshire
Corico Office Professionals, Inc. N. Hampshire
The Consol Group, Inc. (14) N. Hampshire
TRS International Group, Inc. Delaware
TRS International Group, S. de R.L. de C.V. Mexico
TRS International Group Asia Pacific, Inc. California
TRS Management Resources Pte Ltd. Singapore
TRS Management Resources, Inc. S. Carolina
United Nuclear Services, Inc. Ohio
FD Services, Inc. California
Norfolk Maintenance Corporation California
Fluor Abadan Limited Bermuda
Fluor Atlantic Limited Bermuda
Fluor Continental Limited Bermuda
Fluor Daniel Illinois, Inc. Delaware
Fluor Daniel Intercontinental, Inc. California
Fluor Daniel Nigeria Limited (13) Nigeria
Fluor Daniel Venture Group, Inc. California
Fluor Gulf Communications, Inc. California
Micogen Inc. California
Micogen Limited I, Inc. California
Micogen Limited II, Inc. California
Solio-Flo LLC (12) Delaware
Springfield Resource Recovery, Inc. Mass.
Fluor Distribution Companies, Inc. California
Fluor Mideast Limited California
Fluor (Nigeria) Limited Nigeria
Fluor Oil and Gas Corporation California
Fluor Real Estate Services, Inc. Delaware
Fluor Reinsurance Investments, Inc. Delaware
FRES, Inc. Delaware
</TABLE>
7
<PAGE> 8
<TABLE>
<CAPTION>
Organized
Name of Company Under Laws of
--------------- -------------
<S> <C>
Fluor Corporation (continued)
Maintenance and Industrial Services, Inc. Delaware
Micogen Limited III, Inc. California
Middle East Fluor California
Pinnacle Insurance Co., Inc. Hawaii
St. Joe Carbon Fuels Corporation Delaware
SJM Holding Corporation Delaware
Allegheny Coal Corporation Delaware
Massey Coal Company (partnership) Delaware
A. T. Massey Coal Company, Inc. Virginia
Aracoma Coal Company, Inc. W. Virginia
Barnabus Land Company W. Virginia
Ben Creek Coal Company W. Virginia
Big Bear Mining Company W. Virginia
Black Knight Mine Development Co. W. Virginia
Boone East Development Co. W. Virginia
Raven Resources, Inc. Florida
Macinaw Mining, L.C. Florida
Boone West Development Co. W. Virginia
Macinaw Mining, L.C. Florida
Cabinawa Mining Company W. Virginia
Central Penn Energy Company, Inc. Pennsylvania
Central West Virginia Energy Company W. Virginia
Ceres Land Company W. Virginia
Cline & Chambers Coal Company, Inc. Kentucky
Dehue Coal Company W. Virginia
Demeter Land Company W. Virginia
Douglas Pocahontas Coal Corporation W. Virginia
DRIH Corporation Delaware
Duchess Coal Company W. Virginia
Elk Run Coal Company, Inc. W. Virginia
Appalachian Capital Management Corp. W. Virginia
Bishop Mine Development Co. W. Virginia
Black Castle Mine Development Co. W. Virginia
Black King Mine Development Co. W. Virginia
Chess Processing Company W. Virginia
Marfork Coal Company, Inc. W. Virginia
Continuity Venture Capital Corp. W. Virginia
Progressive Venture Capital Corp. W. Virginia
Monongahela Venture Capital Corp. W. Virginia
Marshall Venture Capital Corp. W. Virginia
Massey Capital Management Corp. W. Virginia
Massey New Era Capital Corp. W. Virginia
New Massey Capital Corp. W. Virginia
Preferred Management Capital Corp. W. Virginia
Rawl Sales Venture Capital Corp. W. Virginia
Sprouse Creek Venture Capital Corp. W. Virginia
Support Mining Company W. Virginia
Federal Development Corporation W. Virginia
Foothills Coal Company W. Virginia
Goals Coal Company W. Virginia
</TABLE>
8
<PAGE> 9
<TABLE>
<CAPTION>
Organized
Name of Company Under Laws of
--------------- -------------
<S> <C>
Fluor Corporation
SJM Holding Corporation
Allegheny Coal Corporation
Massey Coal Company (partnership)
A. T. Massey Coal Company, Inc. (continued)
Green Valley Coal Company W. Virginia
Alex Energy, Inc. W. Virginia
Haden Farms, Inc. Virginia
Hazy Ridge Coal Company W. Virginia
Hillsboro Coal Company Pennsylvania
Hopkins Creek Coal Company Kentucky
Imec, Inc. Kentucky
Independence Coal Company, Inc. W. Virginia
Jacks Branch Coal Company W. Virginia
Joboner Coal Company Kentucky
Lauren Land Company Kentucky
Lewco Development Company W. Virginia
Lick Branch Coal Company W. Virginia
Long Fork Coal Company Kentucky
Bandytown Coal Company W. Virginia
Eagle Energy, Inc. W. Virginia
Blue Ridge Venture Capital Corp. W. Virginia
Power Mountain Coal Company W. Virginia
Martin County Coal Corporation Kentucky
Pilgrim Mining Company, Inc. Kentucky
Massey Coal Sales Company, Inc. Virginia
Massey Coal Services, Inc. W. Virginia
Massey Consulting Services, Inc. Virginia
Massey Fuels Corporation Virginia
Menefee Land Company, Inc. Colorado
New Market Land Company W. Virginia
New Ridge Mining Company Kentucky
Nicco Corporation W. Virginia
Majestic Mining, Inc. Texas
Omar Mining Company W. Virginia
Peerless Eagle Coal Co. W. Virginia
Pennsylvania Mine Services, Inc. Pennsylvania
Mine Maintenance, Inc. Pennsylvania
Performance Coal Company W. Virginia
Continuity Venture Capital Corp. W. Virginia
New River Capital Corp. W. Virginia
SPM Capital Management Corp. W. Virginia
Rawl Sales & Processing Co. W. Virginia
Capstan Mining Company Colorado
Feats Venture Capital Corp. W. Virginia
Lynn Branch Coal Company, Inc. W. Virginia
Massey Coal Capital Corp. W. Virginia
Massey New Era Capital Corp. W. Virginia
New Massey Capital Corp. W. Virginia
Preferred Management Capital Corp. W. Virginia
Rawl Sales Venture Capital Corp. W. Virginia
</TABLE>
9
<PAGE> 10
<TABLE>
<CAPTION>
Organized
Name of Company Under Laws of
--------------- -------------
<S> <C>
Fluor Corporation
SJM Holding Corporation
Allegheny Coal Corporation
Massey Coal Company (partnership)
A. T. Massey Coal Company, Inc.
Rawl Sales & Processing Co. (continued)
Sprouse Creek Venture Capital Corp. W. Virginia
St. Alban's Capital Management Corp. W. Virginia
Sun Coal Company, Inc. Colorado
Sycamore Fuels, Inc. W. Virginia
Crystal Fuels Company W. Virginia
Road Fork Development Company, Inc. Kentucky
Robinson-Phillips Coal Company W. Virginia
Rockridge Coal Company W. Virginia
Rum Creek Coal Sales, Inc. W. Virginia
Vantage Mining Company Kentucky
Russell Fork Coal Company W. Virginia
SC Coal Corporation Delaware
Shannon-Pocahontas Coal Corporation W. Virginia
Shiprock Coal Company W. Virginia
Sidney Coal Company, Inc. Kentucky
Spartan Mining Company W. Virginia
Stirrat Coal Company W. Virginia
Stone Mining Company Kentucky
T.C.H. Coal Co. Kentucky
Tennessee Consolidated Coal Company Tennessee
Chestnut Coal Company, Inc. Tennessee
Tennessee Energy Corp. Tennessee
Town Creek Coal Company W. Virginia
Tug Valley Land Company, Inc. W. Virginia
United Coal Company Virginia
Belfry Coal Corporation W. Virginia
Harbour Marine, Inc. Ohio
Knox Creek Coal Corporation Virginia
McAndrews Development, Ltd. Virginia
Valley Coal Corporation Virginia
Wellmore Coal Corporation Virginia
Hilltop Energy Corporation Kentucky
Patrick Coal Corporation Virginia
Vesta Mining Company Pennsylvania
White Buck Coal Company W. Virginia
Williams Mountain Coal Company W. Virginia
Wyomac Coal Company, Inc. W. Virginia
Compania Minera San Jose del Peru S.A. Peru
Mineral Resource Development Corporation Delaware
Robil International Corporation Delaware
St. Joe Erzbergbaugesellschaft m.b.H. Austria
St. Joe Exploracion Minera Inc. Delaware
St. Joe Exploracion Minera Inc. y Cia., S.R.C. Spain
St. Joe Luisito de Oro Inc. Delaware
St. Joe Luisito de Oro Inc. y Cia. S.R.C. Spain
</TABLE>
10
<PAGE> 11
<TABLE>
<CAPTION>
Organized
Name of Company Under Laws of
--------------- -------------
<S> <C>
Fluor Corporation
SJM Holding Corporation (continued)
St. Joe Minera de Espana, S.A. Spain
St. Joe International Petroleum Corporation Delaware
St. Joe Egypt Exploration Corporation Delaware
St. Joe Minerals Corporation & Cia. Brazil
Coral Empreendimentos e Participacoes Ltda. Brazil
Comercial de Minerios do Sul do Para Ltda. - COMIPA Brazil
Mineracao Alabastro Ltda. Brazil
Mineracao Sao Felix Ltda. Brazil
WODECO Nigeria Limited Nigeria
Zenith Coal Company, Inc. S. Carolina
</TABLE>
- --------------------------------------------------------------------------------
(1) Does not include certain subsidiaries which if considered in the
aggregate as a single subsidiary, would not constitute a significant
subsidiary
(2) 40% ownership
(3) 51% ownership
(4) 49.5% ownership
(5) 50% ownership
(6) 35% ownership
(7) 45% ownership
(8) 27.8% ownership
(9) 55% ownership
(10) 49% ownership
(11) 19.99% ownership
(12) 25% ownership
(13) 60% ownership
(14) 33 1/3% ownership
(15) 10% ownership
(16) 90% ownership
(17) 70% ownership
(18) 64.6% ownership
(19) 80% ownership
(20) 20% ownership
(21) 30% ownership
11
<PAGE> 1
EXHIBIT 23
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in this Annual Report on Form
10-K of Fluor Corporation of our report dated November 18, 1997, included in the
1997 Annual Report to shareholders of Fluor Corporation.
We also consent to the incorporation by reference of our report dated
November 18, 1997, with respect to the consolidated financial statements of
Fluor Corporation incorporated by reference in the Annual Report on Form 10-K
for the year ended October 31, 1997, in the Registration Statements and related
Prospectuses pertaining to: Form S-3 No. 333-18315 for the issuance of senior
debt securities; Form S-8 No. 333-22157 for the 1998 Fluor Executive Stock
Plan; Form S-8 No. 333-31293 for the DMIS, Inc. Nissan Maintenance Project
Retirement & Savings Plan; Form S-8 No. 333-30979 for the TRS 401(k) Retirement
Plan; Form S-8 No. 333-30987 for the Fluor Daniel Craft Employees 401(k)
Retirement Plan; Form S-8 No. 333-30983 for the TRS Salaried Employees' 401(k)
Retirement Plan; Form S-8 No. 333-23809 for the 1997 Fluor Restricted Stock
Plan for Non-Employee Directors; Form S-8 No. 333-37153 Fluor Executive
Deferred Compensation Program; Form S-8 No. 333-18151 for the 1996 Fluor
Executive Stock Plan; Form S-8 No. 33-58557 for the Fluor Corporation Stock Plan
for Non-Employee Directors; Form S-8 No. 33-31440 for the 1988 Fluor Executive
Stock Plan; Form S-8 No. 2-77532 for the 1982 Fluor Incentive Stock Option Plan,
1981 Fluor Executive Stock Plan, 1977 Fluor Executive Stock Plan and 1971 Fluor
Stock Option Plan; and Form S-8 No. 2-72712 for the Fluor Corporation Salaried
Employees' Savings Investment Plan.
/s/ ERNST & YOUNG LLP
---------------------
Ernst & Young LLP
Orange County, California
January 27, 1998
<PAGE> 1
EXHIBIT 24.1
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each of the undersigned directors
and/or officers of FLUOR CORPORATION, a Delaware corporation ("Fluor"), does
hereby constitute and appoint L. N. FISHER, R. M. BUKATY, and R. R. DRYDEN and
each of them, with full power to act without the other, as his true and lawful
attorneys-in-fact and agents, for him and in his name, place and stead, in any
and all capacities, to sign the annual report on Form 10-K for the fiscal year
ended October 31, 1997, and any and all amendments thereto, to be filed by Fluor
with the Securities and Exchange Commission and to file such annual report and
any amendments, with any and all exhibits thereto, and any and all other
information and documents in connection therewith, with the Securities and
Exchange Commission; and each of the undersigned does hereby ratify and confirm
as his own act and deed all that such attorneys-in-fact and agents, and each of
them shall do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto subscribed his signature
as of the 28th day of January, 1998.
/s/ D. L. BLANKENSHIP
----------------------------
D. L. Blankenship
<PAGE> 2
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each of the undersigned directors
and/or officers of FLUOR CORPORATION, a Delaware corporation ("Fluor"), does
hereby constitute and appoint L. N. FISHER, R. M. BUKATY, and R. R. DRYDEN and
each of them, with full power to act without the other, as his true and lawful
attorneys-in-fact and agents, for him and in his name, place and stead, in any
and all capacities, to sign the annual report on Form 10-K for the fiscal year
ended October 31, 1997, and any and all amendments thereto, to be filed by Fluor
with the Securities and Exchange Commission and to file such annual report and
any amendments, with any and all exhibits thereto, and any and all other
information and documents in connection therewith, with the Securities and
Exchange Commission; and each of the undersigned does hereby ratify and confirm
as his own act and deed all that such attorneys-in-fact and agents, and each of
them shall do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto subscribed his signature
as of the 28th day of January, 1998.
/s/ C. A. CAMPBELL, JR.
------------------------------
C. A. Campbell, Jr.
<PAGE> 3
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each of the undersigned directors
and/or officers of FLUOR CORPORATION, a Delaware corporation ("Fluor"), does
hereby constitute and appoint L. N. FISHER, R. M. BUKATY, and R. R. DRYDEN and
each of them, with full power to act without the other, as his true and lawful
attorneys-in-fact and agents, for him and in his name, place and stead, in any
and all capacities, to sign the annual report on Form 10-K for the fiscal year
ended October 31, 1997, and any and all amendments thereto, to be filed by Fluor
with the Securities and Exchange Commission and to file such annual report and
any amendments, with any and all exhibits thereto, and any and all other
information and documents in connection therewith, with the Securities and
Exchange Commission; and each of the undersigned does hereby ratify and confirm
as his own act and deed all that such attorneys-in-fact and agents, and each of
them shall do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto subscribed his signature
as of the 19th day of January, 1998.
/s/ P. J. FLUOR
-----------------------
P. J. Fluor
<PAGE> 4
7 POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each of the undersigned directors
and/or officers of FLUOR CORPORATION, a Delaware corporation ("Fluor"), does
hereby constitute and appoint L. N. FISHER, R. M. BUKATY, and R. R. DRYDEN and
each of them, with full power to act without the other, as his true and lawful
attorneys-in-fact and agents, for him and in his name, place and stead, in any
and all capacities, to sign the annual report on Form 10-K for the fiscal year
ended October 31, 1997, and any and all amendments thereto, to be filed by Fluor
with the Securities and Exchange Commission and to file such annual report and
any amendments, with any and all exhibits thereto, and any and all other
information and documents in connection therewith, with the Securities and
Exchange Commission; and each of the undersigned does hereby ratify and confirm
as his own act and deed all that such attorneys-in-fact and agents, and each of
them shall do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto subscribed his signature
as of the 28th day of January, 1998.
/s/ D. P. GARDNER
-------------------------
D. P. Gardner
<PAGE> 5
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each of the undersigned directors
and/or officers of FLUOR CORPORATION, a Delaware corporation ("Fluor"), does
hereby constitute and appoint L. N. FISHER, R. M. BUKATY, and R. R. DRYDEN and
each of them, with full power to act without the other, as his true and lawful
attorneys-in-fact and agents, for him and in his name, place and stead, in any
and all capacities, to sign the annual report on Form 10-K for the fiscal year
ended October 31, 1997, and any and all amendments thereto, to be filed by Fluor
with the Securities and Exchange Commission and to file such annual report and
any amendments, with any and all exhibits thereto, and any and all other
information and documents in connection therewith, with the Securities and
Exchange Commission; and each of the undersigned does hereby ratify and confirm
as his own act and deed all that such attorneys-in-fact and agents, and each of
them shall do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto subscribed his signature
as of the 28th day of January, 1998.
/s/ T. L. GOSSAGE
------------------------
T. L. Gossage
<PAGE> 6
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each of the undersigned directors
and/or officers of FLUOR CORPORATION, a Delaware corporation ("Fluor"), does
hereby constitute and appoint L. N. FISHER, R. M. BUKATY, and R. R. DRYDEN and
each of them, with full power to act without the other, as his true and lawful
attorneys-in-fact and agents, for him and in his name, place and stead, in any
and all capacities, to sign the annual report on Form 10-K for the fiscal year
ended October 31, 1997, and any and all amendments thereto, to be filed by Fluor
with the Securities and Exchange Commission and to file such annual report and
any amendments, with any and all exhibits thereto, and any and all other
information and documents in connection therewith, with the Securities and
Exchange Commission; and each of the undersigned does hereby ratify and confirm
as his own act and deed all that such attorneys-in-fact and agents, and each of
them shall do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto subscribed his signature
as of the 28th day of January, 1998.
/s/ B. R. INMAN
-------------------------
B. R. Inman
<PAGE> 7
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each of the undersigned directors
and/or officers of FLUOR CORPORATION, a Delaware corporation ("Fluor"), does
hereby constitute and appoint L. N. FISHER, R. M. BUKATY, and R. R. DRYDEN and
each of them, with full power to act without the other, as her true and lawful
attorneys-in-fact and agents, for her and in her name, place and stead, in any
and all capacities, to sign the annual report on Form 10-K for the fiscal year
ended October 31, 1997, and any and all amendments thereto, to be filed by Fluor
with the Securities and Exchange Commission and to file such annual report and
any amendments, with any and all exhibits thereto, and any and all other
information and documents in connection therewith, with the Securities and
Exchange Commission; and each of the undersigned does hereby ratify and confirm
as his own act and deed all that such attorneys-in-fact and agents, and each of
them shall do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto subscribed her signature
as of the 28th day of January, 1998.
/s/ V. S. MARTINEZ
------------------------
V. S. Martinez
<PAGE> 8
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each of the undersigned directors
and/or officers of FLUOR CORPORATION, a Delaware corporation ("Fluor"), does
hereby constitute and appoint L. N. FISHER, R. M. BUKATY, and R. R. DRYDEN and
each of them, with full power to act without the other, as his true and lawful
attorneys-in-fact and agents, for him and in his name, place and stead, in any
and all capacities, to sign the annual report on Form 10-K for the fiscal year
ended October 31, 1997, and any and all amendments thereto, to be filed by Fluor
with the Securities and Exchange Commission and to file such annual report and
any amendments, with any and all exhibits thereto, and any and all other
information and documents in connection therewith, with the Securities and
Exchange Commission; and each of the undersigned does hereby ratify and confirm
as his own act and deed all that such attorneys-in-fact and agents, and each of
them shall do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto subscribed his signature
as of the 28th day of January, 1998.
/s/ L. G. MCGRAW
------------------------
L. G. McCraw
<PAGE> 9
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each of the undersigned directors
and/or officers of FLUOR CORPORATION, a Delaware corporation ("Fluor"), does
hereby constitute and appoint L. N. FISHER, R. M. BUKATY, and R. R. DRYDEN and
each of them, with full power to act without the other, as his true and lawful
attorneys-in-fact and agents, for him and in his name, place and stead, in any
and all capacities, to sign the annual report on Form 10-K for the fiscal year
ended October 31, 1997, and any and all amendments thereto, to be filed by Fluor
with the Securities and Exchange Commission and to file such annual report and
any amendments, with any and all exhibits thereto, and any and all other
information and documents in connection therewith, with the Securities and
Exchange Commission; and each of the undersigned does hereby ratify and confirm
as his own act and deed all that such attorneys-in-fact and agents, and each of
them shall do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto subscribed his signature
as of the 19th day of January, 1998.
/s/ D. R. O'HARE
---------------------
D. R. O'Hare
<PAGE> 10
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each of the undersigned directors
and/or officers of FLUOR CORPORATION, a Delaware corporation ("Fluor"), does
hereby constitute and appoint L. N. FISHER, R. M. BUKATY, and R. R. DRYDEN and
each of them, with full power to act without the other, as his true and lawful
attorneys-in-fact and agents, for him and in his name, place and stead, in any
and all capacities, to sign the annual report on Form 10-K for the fiscal year
ended October 31, 1997, and any and all amendments thereto, to be filed by Fluor
with the Securities and Exchange Commission and to file such annual report and
any amendments, with any and all exhibits thereto, and any and all other
information and documents in connection therewith, with the Securities and
Exchange Commission; and each of the undersigned does hereby ratify and confirm
as his own act and deed all that such attorneys-in-fact and agents, and each of
them shall do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto subscribed his signature
as of the 20th day of January, 1998.
/s/ LORD RENWICK, K. C. M. G
------------------------------
Lord Renwick, K. C. M. G
<PAGE> 11
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each of the undersigned directors
and/or officers of FLUOR CORPORATION, a Delaware corporation ("Fluor"), does
hereby constitute and appoint L. N. FISHER, R. M. BUKATY, and R. R. DRYDEN and
each of them, with full power to act without the other, as his true and lawful
attorneys-in-fact and agents, for him and in his name, place and stead, in any
and all capacities, to sign the annual report on Form 10-K for the fiscal year
ended October 31, 1997, and any and all amendments thereto, to be filed by Fluor
with the Securities and Exchange Commission and to file such annual report and
any amendments, with any and all exhibits thereto, and any and all other
information and documents in connection therewith, with the Securities and
Exchange Commission; and each of the undersigned does hereby ratify and confirm
as his own act and deed all that such attorneys-in-fact and agents, and each of
them shall do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto subscribed his signature
as of the 28th day of January, 1998.
/s/ J. O. ROLLANS
---------------------
J. O. Rollans
<PAGE> 12
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each of the undersigned directors
and/or officers of FLUOR CORPORATION, a Delaware corporation ("Fluor"), does
hereby constitute and appoint L. N. FISHER, R. M. BUKATY, and R. R. DRYDEN and
each of them, with full power to act without the other, as his true and lawful
attorneys-in-fact and agents, for him and in his name, place and stead, in any
and all capacities, to sign the annual report on Form 10-K for the fiscal year
ended October 31, 1997, and any and all amendments thereto, to be filed by Fluor
with the Securities and Exchange Commission and to file such annual report and
any amendments, with any and all exhibits thereto, and any and all other
information and documents in connection therewith, with the Securities and
Exchange Commission; and each of the undersigned does hereby ratify and confirm
as his own act and deed all that such attorneys-in-fact and agents, and each of
them shall do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto subscribed her signature
as of the 19th day of January, 1998.
/s/ M. R. SEGER
----------------------
M. R. Seger
<PAGE> 13
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each of the undersigned directors
and/or officers of FLUOR CORPORATION, a Delaware corporation ("Fluor"), does
hereby constitute and appoint L. N. FISHER, R. M. BUKATY, and R. R. DRYDEN and
each of them, with full power to act without the other, as her true and lawful
attorneys-in-fact and agents, for her and in her name, place and stead, in any
and all capacities, to sign the annual report on Form 10-K for the fiscal year
ended October 31, 1997, and any and all amendments thereto, to be filed by Fluor
with the Securities and Exchange Commission and to file such annual report and
any amendments, with any and all exhibits thereto, and any and all other
information and documents in connection therewith, with the Securities and
Exchange Commission; and each of the undersigned does hereby ratify and confirm
as his own act and deed all that such attorneys-in-fact and agents, and each of
them shall do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto subscribed his signature
as of the 28th day of January, 1998.
/s/ J. C. STEIN
----------------------
J. C. Stein
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED BALANCE SHEET AT OCTOBER 31, 1997 AND THE CONSOLIDATED STATEMENT
OF EARNINGS FOR THE TWELVE MONTHS ENDED OCTOBER 31, 1997 AND IS QUALIFIED IN
ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> OCT-31-1997
<PERIOD-START> NOV-01-1996
<PERIOD-END> OCT-31-1997
<CASH> 299,324
<SECURITIES> 10,089
<RECEIVABLES> 930,104
<ALLOWANCES> 0
<INVENTORY> 175,448
<CURRENT-ASSETS> 2,225,886
<PP&E> 2,940,105
<DEPRECIATION> 1,001,315
<TOTAL-ASSETS> 4,697,840
<CURRENT-LIABILITIES> 1,990,684
<BONDS> 300,508
0
0
<COMMON> 52,343
<OTHER-SE> 1,688,707
<TOTAL-LIABILITY-AND-EQUITY> 4,697,840
<SALES> 0
<TOTAL-REVENUES> 14,298,541
<CGS> 0
<TOTAL-COSTS> 14,022,570
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 30,758
<INCOME-PRETAX> 255,269
<INCOME-TAX> 109,082
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 146,187
<EPS-PRIMARY> 1.73
<EPS-DILUTED> 1.73
</TABLE>
<PAGE> 1
EXHIBIT 99.1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
--------------------
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported) May 6, 1997
------------------
FLUOR CORPORATION
- --------------------------------------------------------------------------------
(Exact Name of Registrant as Specified in Charter)
Delaware 1-7775 95-0740960
- -------------------------------------------------------------------------------
(State or Other Jurisdiction (Commission (IRS Employer
of Incorporation) File Number) Identification No.)
3353 Michelson Drive, Irvine, California 92698
- -------------------------------------------------------------------------------
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code (714) 975-2000
------------------
N/A
- --------------------------------------------------------------------------------
(Former Name or Former Address, if Changed Since Last Report)
<PAGE> 2
ITEM 5. OTHER EVENTS.
Certain Factors and Trends Affecting Fluor and its Businesses--Forward-Looking
Statements.
From time to time, certain disclosures in reports and statements released
by Fluor Corporation (the "Company"), or statements made by its officers or
directors, will be forward-looking in nature, such as statements related to the
Company's opinions about trends and factors which may impact future operating
results. The Company is filing this Current Report on Form 8-K to avail itself
of the safe harbor provided in the Securities Act of 1933 and the Securities
Exchange Act of 1934 with respect to any such forward-looking statements that
may be contained in the Company's reports and other documents filed with the
Securities and Exchange Commission under Sections 13 or 15(d) of the Securities
Exchange Act of 1934 and written or oral forward-looking statements made by
the Company's officers and directors on behalf of the Company to the press,
potential investors, securities analysts and others.
Such forward-looking statements could involve, among other things,
statements regarding the Company's intent, belief or expectation with respect to
(i) the Company's results of operations and financial condition, (ii) the
Company's implementation of cost reductions, (iii) the consummation of
acquisition and financing transactions and the effect thereof on the Company's
business, and (iv) the Company's plans and objectives for future operations and
expansion or consolidation. Any such forward-looking statements would be
subject to the risks and uncertainties that could cause actual results of
operations, financial condition, cost reductions, acquisitions, financing
transactions, operations, expansion, consolidation and other events to differ
materially from those expressed or implied in such forward-looking statements.
Any such forward-looking statements would be subject to a number of assumptions
regarding, among other things, future economic, competitive and market
conditions generally. Such assumptions would be based on facts and conditions
as they exist at the time such statements are made as well as predictions as to
future facts and conditions, the accurate prediction of which may be difficult
and involve the assessment of events beyond the Company's control.
The Company wishes to caution readers that forward-looking statements,
including disclosures which use words such as the Company "believes,"
"anticipates," "expects," "estimates" and similar statements, are subject to
certain risks and uncertainties which could cause actual results of operations
to differ materially from expectations. Any such forward-looking statements
should be considered in context with the various disclosures made by the Company
about its businesses, including the risk factors discussed below. Important risk
factors which could cause actual results of operations to differ materially from
those expressed in any forward-looking statements include, but are not limited
to, the following:
Fixed, Maximum or Unit Priced Contracts. An increasing number of the
Company's contracts for the provision of engineering and construction services
are fixed, maximum or unit price contracts and fixed price incentive contracts.
Under fixed, maximum or unit price contracts, the Company agrees to perform the
contract for a fixed price and as a result, benefits from costs savings, but is
unable to recover for any cost overruns. Under fixed price incentive contracts,
the Company shares with the customer any savings up to a negotiated ceiling
price
2
<PAGE> 3
and carries some or all of the burden of costs exceeding the negotiated ceiling
price. Contract prices are established based in part on cost estimates which
are subject to a number of assumptions, such as assumptions regarding future
economic conditions. If in the future these estimates prove inaccurate, or
circumstances change, cost overruns can occur.
Contract Performance Risk. In certain instances, the Company guarantees
facility completion by a scheduled acceptance date or achievement of certain
acceptance and performance testing levels. Failure to meet any such schedule or
performance requirements could result in additional costs and the amount of such
additional costs could exceed project profit margins. Performance problems for
existing and future contracts, whether of the fixed-price or other type, could
cause actual results of operations to differ materially from those contained in
forward-looking statements.
Size and Uncertainty of Timing of Contracts. The Company's future award
prospects include several large-scale domestic and international projects. The
large size and uncertain timing of these projects can create variability in the
Company's award pattern. Consequently, future award trends are difficult to
predict with certainty. The Company's estimates of future performance depend
on, among other things, the likelihood of receiving certain new awards. While
these estimates are based on the good faith judgment of management, these
estimates frequently change based on new facts which become available. In
addition, the timing of receipt of revenue by the Company from engineering and
construction projects can be affected by a number of factors outside the control
of the Company. Frequently, the Company's services on a project take place
over an extended period of time, and are subject to unavoidable delays from
weather conditions, unavailability of equipment from vendors, changes in the
scope of service requested by clients or labor disruptions affecting client job
sites. Uncertainty of contract or award timing can also present difficulties in
matching workforce size with contract needs. In some cases, the Company must
maintain and bear the cost of a ready workforce larger than called for under
existing contracts in anticipation of future workforce needs under expected
awards, which can be delayed or not received.
Government Contracts. Several of the Company's significant contracts are
Government contracts. Generally, Government contracts are subject to oversight
audits by Government representatives, to profit and cost controls and
limitations, and to provisions permitting termination, in whole or in part,
without prior notice at the Government's convenience upon payment of
compensation only for work done and commitments made at the time of termination.
In the event of termination, the Company generally will receive some allowance
for profit on the work performed. In some cases, Government contracts are
subject to the uncertainties surrounding Congressional appropriations or agency
funding. Government business is subject to specific procurement regulations and
a variety of socio-economic and other requirements. Failure to comply with such
regulations and requirements could lead to suspension or debarment, for cause,
from Government contracting or subcontracting for a period of time. Among the
causes for debarment are violations of various statutes, including those related
to employment practices, the protection of the environment, the accuracy of
records and the recording of costs.
Backlog. The dollar amount of the Company's backlog as stated at any given
time is not necessarily indicative of the future earnings of the Company related
to the performance of such
3
<PAGE> 4
work. Cancellations or scope adjustments related to contracts reflected in the
Company's backlog can occur.
Environmental, Safety and Health. It is impossible to predict the full
impact of future legislative or regulatory developments relating to
environmental protection and coal mine and preparation plant safety and health
on the Company's coal operations, because the standards to be met, as well as
the technology and length of time available to meet those standards, continue to
develop and change.
Fluctuation in the Production of Coal. The Company's coal production and
sales are subject to a variety of operational, geological, transportation and
weather-related factors that routinely cause production to fluctuate. For
example, sales may be adversely affected by fluctuations in production and by
transportation delays arising from equipment unavailability and weather-related
events, such as flooding. Labor disruptions also may occur at times or in a
manner that causes current and projected results of operations to deviate from
projections and expectations. Decreases in production from anticipated levels
usually lead to increased mining costs and decreases in results of operations.
Effects of Global Economic and Political Conditions. The Company's
businesses are subject to fluctuations in demand and to changing economic and
political conditions which are beyond the control of the Company and may cause
actual results to differ from forward-looking statements. Coal operations
produce a commodity which is internationally traded and the price of which is
established by market factors outside the control of the Company. Although the
Company has taken actions to reduce its dependence on external economic
conditions, management is unable to predict with certainty the amount and mix of
future business. Revenues and earnings from international operations are
subject to domestic and foreign government policies and regulations, embargoes
and international hostilities.
Competition. The markets served by the engineering and construction
businesses of the Company are highly competitive and for the most part require
substantial resources and particularly highly skilled and experienced technical
personnel. The markets served by the coal business of the Company are also
highly competitive and require substantial capital investment as well as the
ability to produce coal of consistent quality and meet demanding customer
specifications. A large number of well financed, multi-national companies are
competing in the markets served by the Company's businesses. Intense
competition in the engineering and construction business is expected to
continue, presenting the Company with significant challenges in its ability to
maintain strong growth rates while maintaining acceptable profit margins.
4
<PAGE> 5
Cost Reduction Program. In March of 1997, the Company announced a cost
reduction program for its Fluor Daniel operations. The Company's estimates of
the future cost savings from the cost reduction program are forward-looking
statements. The Company may from time to time provide similar estimates with
respect to this or other cost reduction efforts. The actual cost savings may
differ materially from estimates based on a number of factors affecting the
Company's business, including the ability to achieve estimated staff reductions
while maintaining workflow in the functional areas affected and to sublease
vacated facilities within anticipated time frames at anticipated sublease rent
levels.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Date: May 6, 1997 FLUOR CORPORATION
By: /s/ J. MICHAL CONAWAY
---------------------------------
J. Michal Conaway,
Senior Vice President and
Chief Financial Officer
5
